Yes.
All video games are, by definition, interactive videos.
What I imagine you're asking about is, a typical game like Doom is effectively a function:
f(internal state, player input) -> (new frame, new internal state)
where internal state is the shape and looks of loaded map, positions and behaviors and stats of enemies, player, items, etc.
A typical AI that plays Doom, which is not what's happening here, is (at runtime):
f(last frame) -> new player input
and is attached in a loop to the previous case in the obvious way.
What we have here, however, is a game you can play but implemented in a diffusion model, and it
works like this:
f(player input, N last frames) -> new frame
Of note here is the
lack of game state - the state is implicit in the contents of the N previous frames, and is otherwise not represented or mutated explicitly. The diffusion model has seen so much Doom that it, in a way,
internalized most of the state and its evolution, so it can look at what's going on and guess what's about to happen. Which is what it does: it renders the next frame by predicting it, based on current user input and last N frames. And then that frame becomes the input for the next prediction, and so on, and so on.
So yes, it's totally an interactive video and a game and a third thing - a probabilistic emulation of Doom on a generative ML model.