This is not a remake nor is it an FMV scene. Before the Playstation 2 was released, Squaresoft's staff created demo videos to show off what the PS2 hardware was capable of. This demo video is a real time high-model CG re-enactment of the FF8 graduation scene. Only Squall and Rinoa appear during the video. It was possible to move the cameras anywhere and the characters would theoretically be controllable.
The footage lacks the bright yellow filters from the original game, there is a more natural lighting scheme instead. The level of graphical detail and collision in this demo was surpassed by the time FF10's development was completed. Three high-resolution images of the demo were also released to the press.