Well first of all, for now it's for PC only, so definetly NOT! an xbox version.
The way the Sandbox Editor works is a little different than, say the Unreal Editor, in Sandbox Editor you are actually in the game when you are working, that's why he can just drop the player in there, you could do the same in the first Sandbox Editor for FarCry, so it's much easier to see the changes you make first hand, if the scale of a mountain is right, the terrain is to rough or a building is too big, without having to first start the game up, then close it down again to get back in the editor mode, like you have to in Pariah/UT, it just save soooo much time.
And yes you can make anything you can dream of, I would think you can make your own static meshes in 3D Max or Maya and import them just like you can in UT, and the terrain tool is basicly the same as in the Unreal Editor, but the ability to "dig" out a tunnel blew me away, in UT/Pariah you had to create a pretty big static mesh to make something like that, which would mean you had to know how 3D Max or Maya works, and now you can do it in 5 seconds
... amazing, simply amazing, only your imagination seems to set the limit with this editor,
not to mention the time you save when building a map.
And the lighting, as long as you are outdoors you don't even have to think about setting lights in the map, the editor will do that for you in real time, as you saw in the video, that was something that could just take forever to get right in the Unreal Editor, you had to rebuild the map every time you changed a light or moved it's position to see how the light looked now, so another big time saver.
Well as you might have noticed I could go on and on, so I'll stop now before my fingers start to burn,
let's just say I can hardly wait to get my hands on this baby.