The demo has input. The video shows them modifying the world at several points, it's not on rails. It's more like a mini game (except maybe at the end).
UE's game creation tools are very good. The toolset is a huge part of their value prop. And this demo is very explicit in focusing on the fact that artists can now use movie-level tools instead of needing to spend a lot of time on optimisation and game-custom art assets. That's one of the two big leaps they're promoting here - it's partly about an increase in graphics quality, but clearly what they feel most proud of is the increase in tooling and asset flexibility the new capabilities give content creators.
The person that shows the demo can for example choose to move and look and perform actions that are known to not cause performance trouble.
In a game a lot of unpredictable stuff can happen (for example, a bunch of people can cast a spell or drop a grenade at exactly same time). Or you may decide to quickly turn around causing a bunch of texture and geometry data to be loaded.
Game must take it into account and make sure the performance is acceptable with whatever input is allowed and lots of action around and not only when the guy walks slowly in a straight path and slowly pans around.
It doesn't mean it happens in this case but AFAIK it is fair to say that most engine demoes are put together to highlight strengths and hid weaknesses of the engine.
https://web.archive.org/web/20010814190955/http://www.gamesp...
- Andrew Sega in particular was a particularly famous scene musician who went under the name "Necros" and is about as legendary as you can get for people who weren't part of the Future Crew team who made Unreal.
- Alexander Brandon (Siren) is still in the game industry and has done soundtracks for a ton of really well known games such as Jazz Jackrabbit.
- Daniel Gardopée went by Basehead and was part of FM and the KFMF demo groups (both big deals at the time) and I think is still in gaming.
- Michiel van den Bos (MCA) is the only non-American scener (Dutch) who provided music and is also still in gaming.
At the time it was kind of funny and completely cool to fire up Unreal and hear some well known Necros, Basehead, and Siren songs in the game which had been circulating in BBS and early demoscene ftp sites for a while.
https://en.wikipedia.org/wiki/Unreal_(1998_video_game)#Audio
This rarely transfers to a product that has a lot of content to be built, an actual budget, good but not star developers and conflicting requirements.