I agree that some are missing the point. It is not about the quality of the sound. It is about replacing an IDEA (sketched out in MIDI) with an actual recording by an artist FROM A REMOTE LOCATION.
That performer does not even need to own Cubase (I think). All they need (I think) is the free “performer” application. They hear your basic song and then add a living breathing performance.
I think the latency over the internet is only a concern if you were trying to record from two different locations at once. If you are only recording at one location, you could be 30 seconds late at the mixing desk because all you are doing is recording the performance and replacing your MIDI track with it. So you turn your MIDI idea into a song with real instrument recordings one performer at a time from multiple locations. Not unlike simply sending them your project and letting them replace the MIDI and then send it back, but they don’t need Cubase at all.
Anyway, I do think it is a good idea for collaborations. If all the collaborating performers use Cubase then it doesn’t do too much other than save the hassle of sending the projects back and forth. Probably not something I would use, personally.
Lastly, I will agree that the video it quite funny. The tones of their voices and interaction reminds me of two ladies on a PBS talk show about flowers or pastries. Remember the NPR Delicious Dish skits on SNL with Ana Gasteyer and Molly Shannon? It does a fair job of describing what VST Connect is designed to do, however.