The demo depicted the introduction sequence to the original Final Fantasy VII, but was titled "Technical Demo for PS3." This means that it may or may not turn into an actual game. The PS3 can finally deliver Final Fantasy the way it was meant to be delivered -- just like the CG cutscenes.
The demonstration was a complete recreation of the beginning to Final Fantasy VII using some "awesome, awesome" graphics. It's an exact duplicate of the original game. It could even be a full recreation.
UPDATE: There will not be a Final Fantasy VII remake for PS3. Repeat, there will not be a remake. But, there will be a new Final Fantasy game. We'll have info on that as it happens.