I think it's quite telling that you point to me about having idealized, subjective expectations and then describe the demo as "limited yet fully dynamic gameplay". It rotates the car to left or right depending on whether you press left or right.
It's super-interesting but it doesn't recreate limited fully dynamic gameplay. It doesn't recreate any sort of dynamic gameplay. That's your idealized, subjective interpretation.
The driving seems pretty dynamic to me. Maybe "fully" was a bit hyperbolic, as I can't really justify or quantify what that would entail. On the other hand, saying that it's not dynamic at all seems equally misguided. Also you seem to disregard the "limited" and "segment" qualifiers which was there for a reason.
It's a neural network that recreates a limited, yet fully dynamic gameplay segment only based on player input. It's a really neat and fun project.