Project Spark developer Team Dakota has shown off an extended look at Microsoft's in-development world-creation game.

The team live-streamed over 40 minutes of live gameplay over Twitch.TV last night, showing off Project Spark's powerful level design and NPC AI tools.

First up is a look at how easy it is to build a generic fantasy environment to explore - including exploding goblin enemies.

Fast forward to around 35 minutes and the team will guide you through the game's Limbo-esque monochrome level spotted during the game's unveiling at E3.

Project Spark will arrive alongside Xbox One at launch as a free-to-play digital download.

The version shown below is the Windows 8 PC build (albeit with a Xbox controller). A 360 version is also in the works.