We've seen a ton of projects play with the idea of building gorgeous worlds, using randomly generated landscapes—sometimes even paying tribute to Minecraft—but having much more sensitive building and editing tools in a world looking much more realistic, like, say, a sandbox RPG or FPS, is certainly new and refreshing.
The engine behind the demo above, called VoxelFarm Realtime, is still under heavy development. You can follow its progress at the Procedural World blog, where the man behind the project, Miguel Cepero, plans to put up new videos in the future on a monthly basis.
Can't wait to see this one-man project finished.
VoxelFarm Engine: Feb 2013[YouTube]