Tech used in the demo is impressive (apart form water looking like jelly), but not expecting first iteration of next-gen consoles to come even close to this. Kind of like how Sony showcased The Dark Sorceror tech demo for PS4 in 2013.
Looks like this is part of Sony's marketing plan to hype this for casual audience.
Microsoft, so far, showcased "gameplay" video for several games on Xbox Series X.
Saw glimpses of that and they were not as graphically impressive as this tech demo, but they looked more realistic as to what expect from next-gen consoles in the beginning.