Why can't this be real?
I know this is an animation, but come on, ALL OF MY MONEY if this was legit.
Also, this too:
https://www.youtube.com/watch?v=TheLcReirz8 <- SEGA/Sonic Team, this can be done. Why can't you do it?
If we're talking about physics, then okay, those seem pretty great (although the first video shouldn't count because as you said, it's an animation, actual gaming physics are a completely different thing).
If I'm going to be honest, as far as visual goes, I don't think the graphics should be like that. It looks nice, but stylistically it doesn't give the Sonic vibe better than what Sega accomplished with their last few outings with the Hedgehog Engine.
And the last video doesn't look very good visually. I get that this is a test level, but the visual style is really unappealing. Like Sonic's pallete looks so dull and damped. Also, I am kind of not a fan of the bloom/blur stuff UE4 has. Hopefully they'll address that.
I think Sega's graphics in regards to Unleashed/Colors/Generations works much better.
EDIT: For the record, there is a 2.5D Sonic with physics that mostly mimics the Sega Genesis games. That game would be Sonic Generations for 3DS (made ironically by Dimps, the same devs behind Sonic 4). Shame the game is somewhat mediocre, but the game controlled pretty well. But all Sega needs to do make an engine that mimics that game's physics (with a lot of touch ups/improvements) with beautiful graphics like in Unleashed/Generations.