The demo begins with a flyover of the game's city. Rather than slick and night views as in NFSU, the overcast afternoon shows a rusting metropolis in great detail. Containers, girders, cracked pavement, and other industrial detritus forms the landscape. The transition from Xbox to Xbox 360 actually seems more subtle than you might expect. It's not to say that this game looks like something the original Xbox could do, but it's to say that the effects look like a high-range Xbox game; it's the increased polygonal power only becomes obvious when you watch the game for awhile. Slowly it becomes obvious that there's so much more in this city than the original Xbox could display at a single time.
Rather than a full-fledged demo of the main game mode -- which the EA PR rep mentioned would be a free-roaming city that at least superficially resembles the city in Need For Speed Underground 2 -- the only thing on offer is a drag racing demo that recalls the same mode from NFSU2. After the flyover, the demo circles down on two cars, a BWM, and a Mazda RX8. The detail on the models is pretty solid now, but hardly a quantum leap over the topnotch current-gen racers (which is hardly a terrible starting point, given the massive increase in track detail on top of the excellent car models).

The demo is a drag-racing demo, so as in NFSU2 you don't have to really steer so much as let the game guide you and make course corrections. You must shift in time to on-screen cues, and can boost with nitrous. The path winds through the city, taking you under (or around) a semi loaded with giant logs and into a tunnel crowded with traffic. The traffic behavior and amount doesn't seem to indicate any big difference from current-gen capabilities, either. The control is easy and familiar, but still a little touchy in its early state.
The most exciting part of the demo is more conceptual than actual: at the end of the race, the cops come in the side of the race to try and put a stop to it. While obviously scripted in the current demo, the idea behind this is cool: the developers are putting a ton of effort into cop AI. Rather than current-gen games like Driv3r where the cops simply try to run into you, the police in NFS Most Wanted will actually use strategies like boxing you in to stop you.
The game is a street racer, so the customization of the NFSU series carries over and is still key. You will be able to increase the capacity of your car immensely, and take a very basic car very far if you keep up with the customization. Playing into an idea that's very similar to Grand Theft Auto, if you change the appearance of your car you can throw off police pursuit. The game keeps a "heat meter" which will show your current notoriety with the fuzz. Your goal will be to become the most notorious street racer in the city, and there's a "blacklist" which you want to get to the top of. Unfortunately, none of this stuff was really in the 360 demo, which was more situated somewhere between the level of a tech demo and a full-fledged game demo.
It's clear that the developers are interested in providing a gameplay experience that will be familiar for fans of Underground, but different enough to be distinct. Right now, Xbox 360 fans can look forward to increased detail as well as the new gameplay. While the E3 demo is far from an indication of what the final game will be like, the direction the team is going is much more obvious: it's a different, grittier type of NFS concerned with evading the cops as you build your rep and car, and the power of the 360 is being spent on police AI and city detail.