Demonstrating some crazy idea always confuses people who expect a finished product. The fact this works at all is sci-fi witchcraft.
Video generators offer rendering without models, levels, textures, shaders-- anything. And they'll do shocking photorealism as easily as cartoons. This one runs at interactive speeds. That's fucking crazy! It's only doing one part of one game that'd run on a potato, and it's not doing it especially well, but holy shit, it's doing it. Even if the context length stayed laughably short - this is an FMV you can walk around in. This is something artists could feed and prune and get real fuckin' weird with, until it's an inescapable dream sequence that looks like nothing we know how to render.
The most realistic near-term application of generative AI technology remains as coding assistants and perhaps rapid prototyping tools for developers, rather than a drop-in replacement for traditional game development pipelines.
Sure, let's pretend text is all it can generate. Not textures, models, character designs, et very cetera. What possible use could people have for an army of robots if they only do a half-assed job?