E3 2011: Zelda Wii U concept screen

It's really not that impressive on a technical level. It's just that a) Nintendo's artists are amazing, and b) its the first Zelda anything to be shown on that level of hardware. Otherwise it's jaggy, the poly count is so-so, textures are eh, and there's nothing overly impressive about the lighting.

But, on the plus side, it was running in real time on early hardware and probably rushed. I have confidence that not only will that kind of IQ be playable on the Wii U, but easily surpassed. Zelda Wii U will look even better.

EDIT: Here's some off screen footage of the demo.

Obvious answer is because the Wii doesn't hold a candle to the Wii U's graphical processing.

Not so obvious but legitimate answer is because Eiji Aonuma felt limited with Twilight Princess. He felt that because of the realistic art direction and proportion restrictions they deliberately held back on making anything too outlandish. Because Skyward Sword has motion controls and movement integral to the experience, they wanted to express both your movements and the enemies through more animated, exaggerated means. They chose a new visual direction to accompany the more unrealistic proportions and movements.

The controller doesnt render anything.