The demo started in a cave environment. Layle is joined by a Selkie named Belle, who assists by running out ahead and pointing Layle (and the player) in the right direction. "The right direction" happened to be a room full of goblins early on, which gave me a chance to explore the game's combat.
Essentially, it's based on picking up your enemies with your mind and throwing them around -- or picking up other stuff and throwing it at the enemies. You target enemies with the pointer, hold B, and then lift the Wiimote to raise them up, and flick forward to toss. Occasionally something "new" will happen, like a Goblin being buried halfway in the dirt, and the screen will display a message awarding you for a new reaction.
I noticed that it's kind of hard to aim your projectiles as everything sails out in front of you like a javelin, even the decidedly non-javelinesque Goblin. I don't think I was ever able to hit one enemy with another; most of my kills came from tossing Goblins down into the ground. Which isn't really something to complain about!
After that, I went back through the cave into a series of small corridors, again led by Belle. I was chased briefly by some kind of ... moving wall with two monstrous torsos sticking out, both of whom shot fire at me when I tried to target them. Rather than actually making any progress in the fight against them, I just fell when the corridor ended in a drop. This seems to have been the intended course of action.
The next section of the game was one of the most interesting I've seen yet. The mysterious antagonist, Amidatelion, uses his own powerful telekinesis to cause all the rectangular stones in a large room to begin lifting. He does this after Layle just drops a giant column on him, in an uncharacteristically decisive move for a Final Fantasy hero. Layle and Belle then begin to climb the stones as they fly upward.
Here, I was able to use the grappling ability for the first time. Certain objects will be marked with an icon indicating that you can grab on to them. Holding B and pulling, just like you would to lift an enemy, lifts you up toward that object on a glowing, ethereal line. At the same time, other icons appear on surfaces that you can jump to, which is accomplished by pointing near them and pressing A. Both the grappling and the jumps employ a degree of auto-targeting, so extreme precision is underemphasized in favor of not falling off of things all the damn time.
In many cases, the grapple move actually pulled a floating block into position rather than pulling Layle up to it. He could then jump up on the block. I made it to the top of this structure and then exited onto a field, where wolf monsters surrounded me. Apparently something I did made the monsters happy, because they stood around me with heart icons over their heads. I have no idea. I also have no idea why they started urinating on me. Since I ran out of time, this will have to remain a mystery for now. At least it speaks of more complicated relations with "enemy" creatures than simply killing them. It's also pretty funny.