It looks like a big wand with a glowing purple ball on the end. According to the Sony techs, the PlayStation EyeToy tracks the big glowing ball in order to capture your motion as you play. From the demo we are seeing, the Eye is capable of replacing the control in the virtual world with things like baseball bats, guns, and even a laser whip.
Sony is very excited about the artistic potential of their new motion controller. The new controller is capable of capturing even tiny little motions so that you can draw or write your name with a fairly high degree of accuracy. We also got to see them use a spray paint cannister (which they had to shake up before using) and 'tag' a brick wall.
Next they showed off the potential the Sony motion controller has for fighting games. We saw sword fighting, shruiken throwing, and archery used against reactive CG targets. The sword fighting section is where this motion controller first impressed me; the level of control you have over even the very tip of the blade looks astonishing. The bow and shruikens were nice to, although I think Sony's targeting system could use some work.
On the whole I can't say the Sony motion controller impressed me that much. It looks like a well-designed, solid peripheral, but it's not nearly as mind-blowing as the Natal. They're just in different classes. It does look like Sony's new entrant will have a good shot at giving the Wii a run for their money, and I have a feeling that the best motion capture fighting games will probably be coming out for the PlayStation 3. That's one area Sony's motion capture technology has a definite edge in.