Dr. Richard Marks, creator of the EyeToy, illustrated much of the same technology during the PlayStation 2 era, using a much more bulbous magic wand to showcase what the console's camera accessory was capable of. Hardly as impressive an implementation of what was on display during Sony's E3 showing, which teased first-person shooter and intricate drawing functions, but fascinating nonetheless.
I remember using similar tech when I first played Harmonix's EyeToy: AntiGrav at my first E3, when the game was intended to ship with bright green gloves, letting the camera track player movements. This looks familiar, but certainly not as refined as what appears to be possible with the PlayStation 3 iteration.
Thanks to Miguel for the heads up!