According to Wired UK's writeup of the talk, Milo encountered snails on a walk, and asked the demonstrator if he should step on it. When Dmitri encouraged him, Milo ended the poor e-creature's e-life. Live tweets from @TEDNews note that Milo hesitated before doing so. The demo continued with Milo going home to eat dinner, getting in an argument, and soliciting some words of encouragement from the player.
All of this is significant not because we hate snails, but because this is the first demonstration we've seen of Milo since E3 2009. Molyneux ended the demonstration with the shocking truth that all the world's Milos are going to form a Borg-like hive mind, with the AI data "in the cloud" (as Wired puts it), continually learning from individual interactions. He also revealed a more concrete, game-like narrative for Milo, in which players experience a "tutorial" during which Milo's family moves, with the game opening up afterward to allow you and Milo to explore the new surroundings.
[Image Credit: James Duncan Davidson / TED Conference]