Here's just an example: it can detect your heartbeat. Not by listening, but by watching the pulsating infra-red variation in your complexion. We can't see it, but Kinect can. We can only speculate about the effect on gameplay if you have an episode of ventricular fibrillation.
It will use this, plus facial analysis, to determine your mood, stepping up the pressure if it feels you're scared, or treading carefully if it thinks you're confident. Or it might just find some soothing music for you.
And because it has infra red sight, you can watch your movie or play games in darkness - while Kinect keeps its eyes on you.
The audio capabilities are beyond what you think might be possible. A non-directional microphone in a room with bad acoustics (i.e. a room in your house!) just picks up a complete mush, almost completely masking any potential voice commands. The Kinect separates voices from the background noise so well that it can understand commands over gaming or even movie soundtracks. It's extraordinarily directional as well, which helps to detect, localise and understand the incoming voice instructions.