it does know where it is in 3d space. yes in boxing that is all it uses, but in other games ive seen it uses more. the controller knows every direction it can be facing and also knows how far away from the console it is. you put all those together you have 3d space. the sensor bar is just a still point so that there is always a spot for it to sync via infrared, if it only used bt then it would matter where you put the console. therefore pointing on the screen would be damn near impossible. in time youll see the remote do much much much more. this is only the beginning.