I remain rather skeptical (my daily work consists of running computation on often thousands of computers). Still smells strongly of marketing to me (which does not mean it does not run on servers) - it's a cool marketing line, and it somehow doubles down on the dubious marketing of the xbox one regarding cloud tech.
First, it's true the physics are impressive (not blown away, though) but it's not something that games traditionally focus on. . It's better than red faction guerilla, but that's one of the few games that goes for that kind of feature, and that was last gen. I am personally significantly more impressed by something like flex from nvidia, which runs real time on a GPU (yes, one much faster than the one in an xbox one).
https://www.youtube.com/watch?v=0vMllWRX6SI
The money aspect is a bit strange, too.
Azure is not magic. Big data center have driven down the cost of IT and software deployment. They provide tools so that people can use compute as needed, and charge them for it.
It drove down the maintenance/IT cost- but not to zero. It does not drive the electricity cost to 0, in fact, it barely does anything to reduce it.
So yes, let's pretend it takes 14 servers to run the game (is that the number I read somewhere?). Let's count 100W per server (a very generous estimate). Let's say an average gamer is going to play the game for 20 hours. That's 28kW of electricity, something that will cost Microsoft 4 dollars or so. It might be small, but its nothing to scoff at; for a $60 game, for which about 50% go to the publisher/console owner (in this case the same thing, Microsoft), that's a significant amount of money. It also makes it difficult to lower the price.
A gamer that plays the game hundreds of hours ends up costing money to microsoft.
That's bonkers. I guess it's doable with IAP, or continued monetization of some sort (ads? live is not enough).