They selected the first level, leading the game to load into another familiar zone title screen with Knuckles standing at the beginning of the level. This stage was beautiful. The ground was a nice chocolate brown with purple and white crystal walls which refracted light everywhere, which we later saw was being illuminated by a half moon glowing through cracks in the cavern's ceiling. The level was very similar to a roller coaster with the way it dipped up and down, extremely hilly but smooth. Knuckles, as promised, plays pretty much identically to Sonic in Sonic Colors and Sonic Generations with very few differences. Knuckles even has a boost meter, which fills as enemies are destroyed, rings are collected, and moves are performed which he uses to run fast, just like Sonic. Instead of the ground pound/stomp attack, Knuckles drills downward like he does in Sonic Adventure 2. Instead of sliding under tight spaces, Knuckles can dive through the ground and back up through it like a dolphin through water. Instead of the homing attack, Knuckles will glide with his fists forward, gradually losing altitude until he either lands or connects with a climbable wall. We were told that Knuckles could climb almost any vertical surface, but there would be some surfaces he would not be able to climb, such as ones made out of metal, but those surfaces would only be in specific areas and would be infrequent, leaving Knuckles to be able to climb almost anything anywhere.
At the end of the level, Knuckles comes across an underground temple, which is where he discovers murals about the necklace we saw Dr. Eggman with earlier in Sonic and Tails' story, shortly before Dr. Eggman himself strolls into the place, unaware of Knuckles being there. Knuckles follows him until Dr. Eggman finds the necklace and takes it, when Knuckles exposes himself by clumsily causes a brick he's leaning against to fall and make his presence known. Dr. Eggman tries to convince him to let him pass, but Knuckles tells him that he's no longer falling for his tricks and he isn't going anywhere. Dr. Eggman distracts Knuckles by looking aside and saying, "Sonic? You're here too?" and then runs past, able to climb aboard his giant drill vehicle just before Knuckles catches up.
What proceeds is a running boss fight, similar to the ones in Sonic Unleashed and the final boss of Sonic Colors, where you play as Knuckles chasing Dr. Eggman in his drill vehicle through a never ending tunnel that it is creating as it goes. We were told that there were a few different strategies that could be used to damage the boss, but they focused on collecting enough rings to use the boost to catch up to the back of the drill vehicle, then using Knuckles' unique ground diving move to dive underground and then come up underneath the vehicle, effectively making Knuckles punch its weak underbelly. We were told the cockpit and large tires were also attackable, and each weak point had different defenses that you would have to watch out for or risk hurting yourself trying to hit them.
After the boss fight, pretty much the same cut scene from before where Dr. Eggman and Knuckles exited the tunnel that the drill vehicle created in the park with Sonic and Tails watching, except the beginning and end of the scene which focused on Knuckles instead of Sonic and Tails.
After this demonstration was complete, we watched a powerpoint presentation with screenshots from the game. We were told how the story would focus on Sonic, Tails, Knuckles, Amy Rose, and Dr. Eggman with a couple of appearances throughout the game, but those appearances would have less importance to the plot than Amy Rose's role in Sonic Unleashed. For example, Amy Rose's story once you unlocked it would begin at Cream's house, where we see Cream, Vanilla, Gemerl, two Chao, and some Flickies. Outside of that scene, none of those characters make an appearance outside of one more scene with Cream in it. Emblems will be making a return, and will be earned in various ways with ten emblems per level. They can be earned for completing levels with each character, getting an S rank with all four characters, collecting all red rings with any character, and completing side missions for the level.
Collecting emblems will unlock additional "partners" of characters for bonus missions for the levels. These partners will not be part of the main story, but will have their own little side stories and are not required for completing the game. Two examples we were given were Shadow and Rouge as on pair and Silver and Blaze as another pair, but we were told that they are planning to have others. These pairings will not have any story elements to them outside of the conversations they have during the levels, and you decide which of the two characters you want to play as while the other tags along, ala Sonic and Tails.
There will be no Chao Garden, before anyone asks. The two Chao at Cream's home are the only two in the entire game as far as I was made aware.