Project Spark was the most intriguing game Microsoft brought to E3 last week, because it really isn't a game at all – it's a toolbox for making your own.

Microsoft has been building it in secret for the past two years, and the demo in which we took part in last week is a surprisingly extensive creation tool that's so simple it's almost indistinguishable from a generic third-person fantasy game.

According to Microsoft engineer Saxs Persson, Project Spark is designed to "give everyone the thrill of making games" by gently walking new players through the steps of creating a simple action-adventure game.

Players can always start from scratch with a blank world or play a pre-designed game that someone else has created but, during our demo, Persson walked us through several different ways to create and play at the same time.

You can stop playing and start editing at any time in Project Spark, zooming out to carve rivers and mountains or zooming in to edit individual objects.

Load up a new game, and Project Spark presents you with a blank world superimposed with random world types: Arctic, Desert, and so forth.

We chose Arctic and the game then asked us what time of day our world exists in--morning, evening, or afternoon--suggesting that worlds created in Project Spark will not change time dynamically. You probably could rig your world up to switch between times of day based on triggers, such as when a player achieves an objective or uses an object.

Adding simple scripts like that is easy; Project Spark lets you stop playing any time to adjust basic game design elements; what the A button does, where the player's health bar appears on screen, or when other characters in the world follow the player's character.

You can design your own scripts using commands like IF, WHEN, and DO to create games where creatures DO go to sleep in their homes WHEN the time of day switches to night IF the player has rebuilt their village.

Every creature in Project Spark can be physically edited and given custom AI, physics systems, and dialogue.

Our demo defaulted to a medieval fantasy setting – presumably more assets will be released as downloadable content for Project Spark, which will be free to play on Xbox 360, Windows 8 and Xbox One.

The game narrator prodded us to pick a structure where our quest would start – a tavern, a farm, a windmill and so forth – and a hero type. Our guide created a ranger from a tiny farm, and we set off to greet a randomly generated needy neighbor, accepting her quest to recover a valuable potion from a vicious monster.

Project Spark paused again and asked us to create a boss monster hideout in the world, then to draw a quest path from the boss to our hero. The game will automatically flatten and sculpt the world to make the path traversable, sprinkling random enemies and side quests in along the way.

The combat we saw during our Project Spark demo was very simple. Enemies charged mindlessly forward while our hero hacked and slashed them to death.

Once we had a basic game in place, our guide picked up his gamepad and started off on his newly-created quest. At multiple points along the way, he paused the game to switch back into creation mode to edit enemies and adjust their behavior, their size, and even how physics would--or would not--affect them.

No matter what you're playing in Spark, you can pause at a moment's notice and edit the game to your heart's content. If you edit something made by someone else (Microsoft or another player), you'll get credit for remixing the item – the original creator will also retain credit for the work.

You can remix and combine almost anything in Spark: worlds, items, creatures, or A.I. scripts. When you remix something a new version is created separate from the original, which could lead to some really interesting development in the marketplace as different players build upon each other's work.

During our demo, we saw a giant robot built out of tree pieces and a working musical keyboard that could generate its own backing tracks, record itself, and play the song back. The keyboard was built with repurposed in-game assets, including wooden columns laid on their side and tinted white and black to make giant keys that the player can jump on.

Players can edit props in the world to make them interactive, allowing bonfires to trigger time changes or work benches to trigger crafting minigames.

Amazing user-created items like these are still rare, and the lion's share of games built with Project Spark is likely to be incredibly simplistic. Our fantasy game took twenty minutes to create and looked the part, with sparsely populated tundra, ridiculously dumb enemies, and stilted, boring dialogue.

But almost everything can be edited, leaving me hopeful that a small percentage of dedicated players are going to sink hundreds of hours into crafting beautiful games from the wealth of raw materials on hand. Those masterpieces can be shared on the Project Spark marketplace so that everyone can play them, remix them, and maybe even pay for them.

Microsoft isn't talking about how the economics will work: whether you can use Project Spark to create branded games for clients or whether you'll be able to charge for your creations, or what you'll pay for downloadable content down the road.