It’s not really — or even remotely — an AI demonstration, but it’s a demonstration of something (probably several things).

Wikipedia provides some ‘Uncanny Valley’ background and links. The creepiness of The Polar Express (2004) seems to have been the trigger for the concept going mainstream.

From the level of human body simulation achieved already, it’s looking as if the climb out to the far side of the valley is close to complete. Sure, this android behaves like an idiot, but we’re used to idiots.

ADDED: Some hints on how the inside out approach is going (and speculations).

As with any modular-robot system, the hope is that the modules can be miniaturized: the ultimate aim of most such research is hordes of swarming microbots that can self-assemble, like the “liquid steel” androids in the movie “Terminator II.” And the simplicity of the cubes’ design makes miniaturization promising.