As a demo it does not have to be a complete product, and it does not have to cover every special case or event. (Though it is more impressive if you can show that your program will work no matter how wierd the user behaviour.)
Imagine yourself as a novice game designer in the low budget section of the Australian Game Developer Conference. You have a PC. You're surrounded by other nervous programmers who haven't got much sleep lately. Game industry executives (me), with groupies and bodyguards (ANU won't let me hire any), emerge from air conditioned stretch limousines (ditto) and stroll from PC to PC. You have ten minutes to demonstrate that if you are hired, you will turn this demo into the smash hit of 2006.
Be imaginative. Show off your artistic flair for characters or settings. Think of moves and abilities that show off your animation and special effects. If you can't be good, be bad. Low budget sci-fi movie bad, with spaceships made from paper plates and aliens made from bubble wrap and vacuum cleaners.
Or, show off your technical ability. Cubic texture environment maps. Multipass alpha blended lighting. Demonstrate that you understand and can take advantage of 3D techniques not covered in lectures.
I will be more flexible on requirements than for previous assignments. The object of this assignment is to demonstrate that you understand how to create reasonably complex interactive 3D programs. The assignment specification is a guide to the minimum standard expected from students on completion of this course. I chose a board game as a good example to get you started. But if you want to do something different, for example a Go-style board with points instead of spaces, or even no board at all, you can.