The dynamic lighting and torches are still in. Only problem is it causes frame rate to tank, you can see the frame rate just drop as soon as he enters this room in the video.
From probably tweaked the darkness to drop the requirement for players to use torches.
it's pretty sad. because iirc the dev sid they changed the old game engine (phyreengine) to fix the framerate issue. now with new game engine they got dynamic lighting destroying the framerate and have to drop it completely (with other cuts) and DS2 ended looking even worse than Demons Souls and Dark Soul 1. really incompetent devs it seems.