Kinect Fun Labs is a demo system for new Kinect technologies. For example, a new system called Kinect Me creates an avatar that looks just like you. You capture your face and hair and clothing and then it creates an avatar that looks just like you.
Another demo is Kinect Finger Tracking through an app called Sparkler. This allows you to to draw in the air with your fingers. It draws, in short, in 3D. You draw “behind” 3D images and you can view the images from different angles.
Googly Eyes allows you to bring in your favorite items into games. For example, you can scan in an object like a toy and then it appear on the Kinect in 3D. Then it bounces around.
What these really are, however, are demos of potential new features for Kinect-enabled games. It is quite impressive. It goes live today and is available for all users.