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It means it is rendered by the engine on the fly (Ã* la most of the cut-scenes in Stranger's Wrath) rather than being rendered by their computers at their end and recorded as a video file.
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Thanks for explaining that. I too, had a hard time understanding what "real time" was. But I just watched a vid on youtube for Resident Evil 4 (A game I don't play) but it shows what real time cutscenes are.
What it is, is cutscene's that happen in the game rather than the game creator adding in an AVI file to put the cutscene in so it'd look better. I know the cutscene's for Oddworld were way ahead of their time, graphics wise in '97 so I think they should stick with that concept and blow us away with the upgrade.