I'm just happy this was about Project Natal and not the Milo and Kate demo... right?

His Southern Reaches [Penny Arcade]

On it's simplest level, Project Natal is a straight forward motion control for the Xbox 360, one that doesn't use a controller. But the technology can also be used to sign you into your 360 automatically, let you play classic 360 titles without a controller and even interact with a child-like, uncanny-free artificial intelligence.

Here's the complete breakdown of everything you need to know about the new technology:

Microsoft Makes You The Motion Controller With Project Natal
See Microsoft's Project Natal In Action
Why Xbox 360 New Controller Is Called 'Natal'
Molyneux's Milo Brings a Virtual Child to the Xbox 360
Testing Molyneux's Milo, A Virtual Boy With, Yes, A Dog
Spielberg: Natal Changes The Way I Write For Games
From Stick Figure To Mind-Blowing Controls
You Ever Wonder What The Bottom Of An Avatar Shoe Looks Like?
Body On With Project Natal's Controller-Free Kick Balls
Stare Into Project Natal's Small, Child-Like Eyes
Microsoft: Rare Working On Numerous Natal Projects
Tetris Creator Skeptical of Project Natal
Wii Remote Wizard Working On Project Natal
Microsoft: Project Natal Can Support Multiple Players, See Fingers
Bam There It Is... Kotaku REMIX
Milo Has the Lifespan of a Fruitfly

Speaking with Peter Molyneux this week, the developer said that the child artificial intelligence for Xbox 360 tech demo Milo and Kate is usually "scrubbed" after about 200 hours. The longest Milo has "lived" is 300 hours, he said. Something done to help test the development of their virtual child and his ability to track experiences.

Molyneux repeated that Milo isn't meant to be a living AI, but rather a cleverly-crafted combination of nuanced facial animation and artificial emotion that creates the illusion of life.

In my second demo of Milo and Kate, I was able to watch the computer that drove the software, just to make sure that the digital child didn't have a puppeteer. The computer running the software took the video signal of the person interacting with Milo and then tracked the movements of the body by placing digital boxes on the joints. It also tracked the facial movements of the person speaking and other key motions, like shoulders.

Molyneux said that other software listens to the voice and analyzes it for emotional responses to cue up reactions from Milo.

The software that analyzes all of this, compares it to the history of interactions it has had with you and uses it to determine things like your mood.

Looking closer at the icons which are pegged to each corner of the screen, including one for work and one for play, it appears that Milo and Kate may one day be a more personal, more interactive version of something like The Sims.

Molyneux also talked about how the software could in theory track your daily Xbox 360 usage to help build out a conversation with you about your gaming habits. He also plans to have Milo track bigger cultural events, like American Idol, and get regular voice updates so the child can talk to you about things currently going on in the world.

The interactions will take place not only in the garden of Milo's virtual world, but also in places like the home's kitchen, in the woods, and other virtual settings.

More interesting to me is that the child will be able to interact with an entire family or collection of people, forming varying degrees of faux emotional connection to them depending on the interactions.

You won't, however, be able to verbally abuse or emotionally attack Milo, Molyneux said.

Milo just won't register anything like that. It's meant to be a positive experience, he said, something that gives people a chance to feel what it's like to have a positive impact on someone, to be a role model.