In the non-boxing exercises (step out, jump squats and arm circles), the animations are fixed, so all it does is try to match the Move animations to it. This of course has the advantage that you don't need a separate trainer there showing what to do, but the accuracy of that is fairly limited and you can cheat on all those exercises. This was a very cheap DLC add-on though, and I'm sure that if someone would try, you could get some very good stuff in.
If you compare to Kinect, then stuff like running while waving your arms around like is possible there would be pretty much out of the question - not completely impossible though as the up-and-down motion from running should be seperable from any movements your arm make fairly accurately, but then turning your head would be hard, and while some games use face tracking for Move, you do really need decent lighting and a white background for that to work successfully, and for being able it to detect turning your head the camera needs to be too close to you (like in GT5)
Kinect still holds many advantages beyond that, like if you do fitness exercise, you should in theory be able to hold weights, while with the Move controller your hands would be tied. Similarly for dancing style movements you would be free to Move your hand like a real dancer, which would be hard to do while holding Move controllers (not that Kinect would track it, but for many people that's not that important). Running while throwing a spear, say, would also be harder. Again, I don't think it would be impossible, but it would be harder.
But I do agree that with proper 3D tracking you can do a lot of cool stuff (in The Fight only the boxing itself and any training exercise involving boxing are really good examples of this), and the precision of tracking your wrist movement in particular and lag-free ness in general do give you a very nice advantage in that area, that should allow for some decent sports games.
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