There are a few things(!) that should be great, but they do not require "MICROSOFT(TM) CLOUD", only a server-based single-player/multiplayer experience.
1) If you have a huge map that has tons of objects interacting with each other, then your console/pc only needs to calculate the events that happen in your recognizable vicinity (the area you can reach/interact with) - everything else can be simply calculated server-side, and feed into your client once you reach there. And when you are there, your system starts calculating the stuff once it is your interaction.
2) Combine the above with a game where you "log into" a virtual world (think Omikron, think Shenmue, think GTA with sci-fi, think Watch Dogs without the shooting-focus, think Blade Runner, whatever), and instead of waiting a LOOONG time to generate the "current state" of the city you just logged into (with your single-player character), the game just loads the initial data directly from the servers. It is not really a processing-heavy stuff, as you could have millions of players requesting data from their game start, but at the same time, you only need a constant ongoing process of calculating the virtual world's state - once.
Of course, the thing about this that it requires a clear vision, it is not easily marketable (so while it would require resources, it does not seem like something that would immediately boost your sales potential), and it also does not need the MS CLOUD but simply an online infrastructure. If the CLOUD marketing and all its bullshit potentially helps us to get there, good. But I feel like it wont be enough. Directors with clear and daring visions of such games is a way to go, and players supporting the idea - I am willing to support good ideas like that, just not on Xbox One
