As opposed to......this demo in the OP? Where was virtually the same thing? You are still moving your hands around with a headset strapped to you and either way you look stupid doing it.
Yep, this would be so terrible for use in VR:
https://www.youtube.com/watch?v=mB_kBqL-JQc
https://www.youtube.com/watch?v=BdCDOhD_7aA
https://www.youtube.com/watch?v=w1riNYgO-3M
https://www.youtube.com/watch?v=yX-6vwRCMnI
I would really like to know how having full freedom of control with your hand to interact with things within VR is "shit" and holding a controller in your hand (Thus restricting your fingers and forcing you to keep a clenched hand) makes more sense.
Having to hold a controller will be limiting in vr, you can never interact with objects naturally because of this, you can't open a door by simply grabbing a knob and turning it (since you would drop the controller) among just about any other interact that'd be natural.
You could always have "shells" for people to use (like the Wii did for certain games, IE the steering wheel and other things) that you can use for games where you are meant to be constantly "holding" an object.
But for most games having the ability to use your hands naturally, just as you would in real life it bridges the gap and allows people to simply interact within a game without any barrier or having to learn things , thus opening the door for more people to experience it and enjoy it.
I'm not going to dig up every single talk both Oculus and Valve have done that said this. I'm sure you can sift through them yourself. I trust the developers and engineers working on the issues over us. If it matters, it is the same reason no one is settling on hand tracking tech alone