I picked up the game today, have played maybe 5 hours.
I hated Fable 1. Just thought it's story was cliched shit, and its maps and missions hopelessly linear. It didn't help that I had just come off Morrowind.
But all that has completely changed in the sequel. It's still not a completely open world but it is anything but linear with tons of branching paths and large areas. This becomes aparent when you are following the "golden trail" and you look all around and see all these other places to go that have no relation to your current quest. And it makes up for not having a Bethesda-style open world by feeling much more crafted and dense with things to do. It's an excellent balance between non-linear and crafted gameplay.
The first Demon Door (not a spoiler don't worry) I found was simply awesome, the style, the animation, the sound, the graphics all just combine to make something really entertaining that will suck you in for hours. It almost reminded me of a fantastical Jim-Henson style inspired world. Certain areas of the game (like Oakfield) have just amazing graphics. I must have just run around in the fields watching all the individual flowers pushed out my way for several minutes. Just running in circles to watch. That's how good it looks.
Combat is fun, but simple. At least so far as I haven't progressed enough to do gun targeting or different levels of magic skills. But even at early levels it's fun as you can so easily combine multiple talents in a single fight.
Molyneux wasn't fucking around when he said you can buy anything in the game. Every building seems to have a deed posted to it that allows you to see a breakdown of it's costs. I already have my eye on a great little open-air pub in Oakfield.
The story is also less cliched that the first one. It's still based around revenge, but it seems like they put a lot more effort into crafting something resembling a uniqueness. Kinda hard to talk about without spoilers, but suffice it to say it's much improved.
The context-sensitive controls are a mixed bag. Sometimes they can be really cool allowing you to do things without entering traditional menues, but other times it can be hard to get the right prompts up and you have to shuffle about a bit.
The dog is fantastic. For instance, one time I was running about and noticed he was missing. I thought what most gamers would probably think at this: "shit, he's probably glitched onto something and stuck." Instead when I doubled back I found he had been injured in the fight and for some damn reason I felt like an ass. Immediately was attached to him after that. Though I think some people might have just kept running thinking he would glitch back and then be confused when they no longer had a dog. Don't know what the steps are to reclaim him.
I'm astounded at the amount of buried treasure around, and in finding it he is obviously your only tool, so in this way the game encourages you to take care of him and teach him new abilities that give you direct benefit.
He acts as a kind of autonomous radar, barking to alerting you to whats around. The lack of direct controls makes him feel more like a companion than a software robot you control.
So in the first five hours, with little new equipment, no real diving into the economy, and not even having a level 2 spell, the game already feels massive and awesome.