Think of that cube as a palette containing all the tracks, samples and modulation effects afforded to the player. Players choose which of four tracks they want to manipulate using the face buttons, such as a bass drum beat and synth melody, then reach outside the cube (you'll know you've reached the edge when the Move remote rumbles) and pull in one of the loops that resides around the perimeter. Again, experimentation is key, since there's no indication of where each loop is positioned around the cube.
Once you've got it playing, you can modify the sound by holding down the Move button, and maneuvering the controller through 3D space. Twisting the remote, moving it up or down, and moving it towards and away from the screen all apply filters to the loop you have playing, from high-pass filters to reverb to flangers. Each individual track can have its own set of modifications applied to it, and all can be reset to normal by double-tapping the Move button.
Players can also drop one-shot samples into the track by swinging the controller towards one edge of the space-cube. Layering the four tracks on top of one another and modifying them to sonically pleasing levels was an easy enough concept to grasp, but I never managed to add these samples to the track in a manner that didn't sound ... well, terrible. Perhaps a more experienced disc-jockey could layer in that element with more grace, as Tiesto I ain't.
The biggest misconception I harbored after my E3 demo is that the level of music customization in the game would be limited to the number of loops available on each palette. Even after a short hands-on preview, I could see how the modulation effects and samples could be combined for unique creations every time. Considering that the game will ship with a handful of songs (each with their own "palettes," elements from which can be mixed as the player sees fit), the combinations are seemingly endless.
The only thing that remains to be seen is how the game's spectator mode will work. Q-Games said that PSN users might be able to download an application for free which will let them listen in to live PixelJunk 4AM sessions, giving players feedback on their songs in a Turntable FM-esque manner. It sounds neat, but whether there exists a market for such an application is uncertain at best. I know one thing for sure: Nobody's going to waste any bandwidth tuning into my non-rhythmic, disjointed sound-nightmares.