In the way we mean the term in video game graphics, no, that isn't animation. And they're not going to fool anybody in the industry with that claim either. I would in fact observe that they'd probably appreciate it if you and others would stop linking that video, as it's obvious from their last video they've dropped the claim to animation, or it would have been in there. It just makes it obvious how stupid their claim to "animation" is.
The one seductive component of the Euclideon presentation is that their system would free up artists to not waste time building optimized models or materials, but I strongly suspect that this would not be the case, it would just change the process of optimizing content. And given that everyone will still need to target platforms which can't handle voxel rendering for some time...
I'd have to say that the Euclideon presentation would have been a lot more impressive if the landscape weren't built out of cubes. You don't need to be a great artist to, say, randomly arrange simple objects to give a more organic look to the landscape -- they're able to zero in on particles of soil but they couldn't do nice terrain contours? That definitely supports Notch's points.
If I were going to show off an island, I'd make sure the land-water interface kicked ass. Unity's terrain demo (which is polygon based and several years out of date) kicks this thing's ass.
http://unity3d.com/support/resources/example-projects/island...
Frankly, I expect if this tech gets used, it will be used to create static worlds... and everything that moves or animates will be polygonal.