I got to try this today at Valve. Absolutely breathtaking; I'm still struggling to put into words what the experience was like.
To answer the questions about space, the developer told me that the cameras could track a space as small as the rug I was standing on, which was about 6x8 feet. He said he has it set up at his desk, and was talking very vaguely about a Counterstrike-ish game he was playing with a partner sitting at a desk in another room.
There was never any point where I got dizzy, or lost my place in the room. And while there were points where I could have walked over "the edge", my brain wouldn't let me do it. There's a scene at the end of the Portal demo where the floor falls away, and I felt myself backing up, so I didn't fall. When I was doing the undersea demo, I moved out of the way of the whale's fin, which goes right over where you're standing. Whoever mentioned presence is spot on-I could have "broken" the experience at any time, but it felt so real, I didn't try to.
There was one point during the Portal demo where I walked over to open a door, and I ran into the guy that was walking me through the demo. So while marking the walls is helpful, there are some issues if there's stuff in the space. The developer specifically mentioned moving things, like your couch and end tables and such.
I had heard some things about this device earlier in the week, but I didn't really pay attention to it. I've tried Occulus, and didn't really like it. But this? There are so many interesting applications outside of gaming that I could see this being used. I can't wait to see how it develops.