I'll present my observations in layers - like Ogres or parfaits. It'll take a couple of layers to get to why this is so seriously cool, not not just an "Xbox Wii".
Layer 1. The Microsoft Wii.
The Kinect comes with Kinect Sports, just like the Wii comes with Wii Sports. It has a selection of games - bowling, boxing, golf, and the like - that you play sort of as mini-games. The selection seems bigger in Kinect Sports, with Track and Field, knock-down-the-blocks, and other stuff that I'm sure would be just dandy if I could get any time on it to play. Here's a demo of ping pong (warning: anoying advert at the beginning).
But other than the you-don't-need-a-wiimote, it's more or less just like the Wii.
Layer 2. The video capture makes it way more than a Wii.
You don't need a remote, because the Kinect has a camera that watches you, analyzes your movements, and translates that into actions for your on-screen avatar. This is a lot cooler in practice than it sounds, and is best shown, not described. This video is from the Dance Central game which sounded completely stupid to me, but which the kids simply love. Think Dance Dance Revolution, but with no pad to step on, and with arm gestures.
Remember, it's figuring this out by watching you with its camera. It even plays back a quick series of frame grabs of you at the end of the dance, which is often laugh out loud funny. As I said, my first impression was that this game would be 100% stupid. I was wrong - way wrong.
Layer 3. The secret sauce of video analysis is very cool indeed
Microsoft has a really innovative technology here, and has made a very shrewed move by opening up the API, which people are already taking and running with. This means that you'll have a lot more stuff in 6 or 12 months, so there will be a continuous wave of cool washing over the market. Smart.
And just how much can you get with the API? Lots. Here's how it works, which is a combination of annoyingly basic (wavelength vs. frequency, duh) and very cool indeed (Infrared depth resolution).
Layer 4. It's personal.
When the Kinect breaks down your image to its component parts, it can recognize you, and tell you apart from other people who use the same system. It can even log you in to Xbox Live when you step in front of it. This seamless personalization is an example of the sort of thing that the depth and breadth of the API will allow. I expect much more of this sort of thing, but it is simply insanely cool.
Layer 5. HAL, open the pod bay door.
There's quite a good voice command capability. The kids had this set up by the time I went to look at it, so I'm not sure what this video is getting at when it talks about setup. But you can not only use voice commands for games, but for watching movies (say, Netflix via Xbox Live).
Still, I'm not sure that I'll hook the Xbox up to Camp Borepatch's main gate:
Borepatch:This strikes me as the Media Center of the future. With cameras and microphones in different rooms communicating over WiFi, with access to your MP3 library and playlists, with a decent text-to-voice to read you recipes for roast leg of lamb, you have something very, very compelling.
HALXbox, open the main gate.
Xbox: I'm afraid I can't do that, Borepatch.
I have to hand it to Microsoft for coming out with something that starts with a "Wii-alike", but takes it to a whole new level.