DynamicLand does seem to be a continuation of a lot of the ideas Alan Kay's spoken about over the years, from the large goals of designing Montessori like environments providing situated context for humans of all ages, to the smaller ideas of computing using universal small objects that cooperate through needs and capabilities, with sideways composition.
From the little bits and pieces I've been able to find, DynamicLand seems to pick up the design threads from his early Smalltalk-71 designs (small objects using pattern-matching of goals), while incorporating some newer ideas (wishes/claims, ie publish/subscribe of goals, a spreadsheet like reactive nature)
I was reading the book Superminds recently, and found a reference to a 2005 paper that actually had a fairly similar idea to what it sounds like DynamicLand is doing: http://ccs.mit.edu/papers/pdf/wp225.pdf.
They created a tangible user interface (i.e., with physical pieces) to guide a simulation of supply chain dynamics.
I suggest reading the abstract and then skipping to the bottom of page 19 in the paper where they describe a "Scenario of Use." The rest of the paper is pretty boring without having a concrete example.