There is a built in Kinect style camera, which is a huge leap ahead of the capabilities of the Xbox One accessory. This allows the device to pick up the environment, as well as your hands as you interact with objects. Since the objects you manipulate are only in the center of your vision, your hands will be in direct line of sight of the camera, which answers a lot of questions about how applications will allow you to manipulate models that could be littered all about the room.
This new camera will also allow you to record what you see, including the holograms, so that a new type of video will be possible to convey the entire augmented reality experience to others.
With development kits already in the hands of designers, and E3 coming up fast, hopefully we will learn about the actual gaming applications intended for Microsoft's futuristic prototype. Look forward to June for more information!
Source: Neowin
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