A Microsoft sponsored talk that was presented at SIGGRAPH 2011 in Vancouver.
As Ben Staples says, “This whole clip is amazing, but long… If you only check out a portion watch at 3:42“. It creates geometry and textures in real-time. They also use this geometry information for dynamic collisions (which is what Ben is referring to at 3:42). Also checkout the object tracking on the teapot.
Only question remains is, “When can I get this working at home!?“