This is Lumino City. It's the sequel to a 2012 game, Lume. It's "hand made" in the sense that rather than being built from digital 3D assets, it was mostly filmed on a set, that was made in the real world.
Even the effects are done, for the most part, for real; the windmill spinning in the town isn't animation, it's footage of the windmill actually turning thanks to a tiny motor.
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It'll be out on PC, Mac and Linux in Spring 2013. An iOS version will come later. It's so, so beautiful.
Lume sequel is a gorgeous world of motorized paper and cardboard [IndieGames]