Well in their example demonstration they stated the servers were 50 miles away. I believe that just might be possible. If they can put a server farm in every major city everything will be great. The question is, can they get away with putting a server within 1000 miles. I personally don't think so, roundtrip 2000 miles is 10 milli-lightseconds (or 10ms ping time for fiber optic with absolutely no routing or processing).
For the average person the minimum ping time to almost any server on the internet is 50ms, 100ms is very, very common. So 50ms there, lets say they really can process your request and produce its compressed video in 2ms as they claim, and 50ms back, 10ms decompression time (at least) You're looking at a delay of 112ms. That's a little more
than 1/10th of a second between every action and its response. Theoretically the game could do a slight bit of negative lag and calculate the video based upon what would have happened had to sent the command 1/10th of a second before you actually did, but that will cause some jumps in fluidity... I don't know which is worse.