Microsoft is continuing to make progress towards the holiday 2010 launch of Project Natal.  Microsoft’s Xbox 360 VP, Ilan Spillinger, showcased the latest Project Natal news recently in Tel Aviv, Israel at the Microsoft Israel R&D Center.

The demonstration shows how Project Natal sees the person in front of the camera and truly shows how advanced the technology.  Natal is able to recognize if a man or woman is standing in front of the camera and completely tracks all movement.  The demo also shows the progress Microsoft has made in regards to lag, performing with little to no lag like past demos.

It’s looking like Microsoft’s Xbox 360 peripheral is progressing well toward its release near the end of this year.

See for yourself in this video of the demonstration.