The video was discovered by ZDNet which states that was first made back in May 2010 which means that some, if not all, of the things in the video may have been changed or dumped since then. The video from the Windows Gaming Experience team shows Xbox 360-like avatars doing things like purchasing more avatar outfits via Microsoft points, playing games on Facebook, finding new games to play and getting invites from friends to join online games. It's all pretty tame stuff, actually, and nothing that isn't available already via third party programs and companies.
Oh, and apparently Microsoft doesn't know how to spell "pwned".
[Via PC Gamer]