I believe in this scenario the route was pre-plotted, or possibly using a special modified version of Google Maps (which was obviously involved in some way, shape, or form).
However, the demo and message is clear: It works. Is it ready for the public? NO, I foresee many accidents, haha. However, the concept is being worked on (by Google, no less) and they are clearly gaining headway. Once they get to the point where Google Maps is more knowledgeable and pre-plotting destinations and possible routes and all that becomes unnecessary, it's a very possible concept.
Using lasers and cameras to see stop signs, traffic lights, etc..in coordination with GPS navigation and a ton of other sensors, it's a totally practical concept that could totally be common in 10 years among new cars.