When I first played 1, 2, Switch I thought Nintendo's end game with the Switch was to make consumer grade AR/VR experiences. They've kinda pushed that area since the Wii and the 3DS, but the Switch was literally the first time where motion controls on the console as a whole felt like it was both integral to the gameplay and not a poorly done gimmick. Labo takes the existing control scheme and takes it to the next level by making full use of the JoyCon's gyroscope, accelerometer, and IR sensor.
Just within the trailer they already show off a few of the unique ways they use the Switch's hardware. The piano is driven from the IR sensors so they can detect when a certain key is depressed. The little robot bug thing and the falling man both use the haptic feedback to move. The fishing rod and bike handles both seem to use the gyroscope with the former probably also using the accelerometer. The robot backpack uses a system of strings attached to your hands and feet to move tabs that will be picked up by the IR sensors. They're genuinely well designed units that are simple in both functionality and construction.
I initially thought its a bit expensive, but you're already paying $60 for the game along with the rest of the materials, which are actually fairly cheap. Since Nintendo is also going to provide templates, you'll equally be able to make your own cardboard ones. If you want to get a more permanent solution, 3D printing or laser cutting is viable.
I don't think it'll be a breakaway success, but it fits Nintendo's overall mentality of pushing new boundaries and creating unique play experiences. It's a really awesome thing for kids, which is the target audience, but also awesome from a pure design perspective.
The way we interact with games hasn't really changed a whole ton. The major innovations like D-pads, touch controls, and motion controls happened a long while ago. However, only until now motion controls are actually viable between the Switch and various VR platforms. Unique control methods and use of hardware should be embraced because it promotes unique experiences in and of itself.