I tried posting this in the Boku thread but it seems people are not interested in the truth...
I was at the demo during the Microsoft Research Keynote speech at Microsoft PDC (Professional Developers Conference). And I got to talk to the Microsoft Research guy working on it afterwards.
This is not a game in the pipe to compete with LittleBigPlanet. What you don't see hear is that before this montage, they explain that this is a product of a person at Microsoft Research and his wife teaching their 9 year old kid how to program in C#. What they want to do is train programming as a life skill in the future just like finance, interpersonal, time management skills, etc. Boku is simply a tool that helps engrain the concepts of programming into a young person's head. It is not a game to compete with LBP. It is being done by Microsoft Research which implies that it is RESEARCH not a product. Microsoft Research has put their stuff into products but this is years later and it almost never looks like the original concept. This is only about education and research. The team that did this was about five people. LBP had hundreds working on it.
Microsoft Research's full presentation can be found here:
http://mschnlnine.vo.llnwd.net/d1/pdc08/WMV-HQ/KYN04.wmv
It is near the end. In the last 30-45 minutes if I remember right.