Sho is beginning by introducing Flex 2, talking about how the framework is free, the just-in-time compiler and that it's based on the Flash Player. All pretty basic stuff. He's now talking about the typical workflow and dividing people up into three categories. Information Architect/Interaction Designer, Visual Designer, Motion Designer, Developer. He goes on to describe what they've found, that designers need freedom to design and the developers need to easily transform that by adding structure and functionality.
Now we are looking at Illustrator and Sho is going to demo the work they've done getting Flex and Illustrator to talk to each other. He has the skeleton of a Flex application, and a matching skin in Illustrator. By breaking the Illustrator files into symbols and labeling them then exporting that as a SWF, you can bring it into Flex. To get the skin to display, you point CSS assets at the exported SWF file and the application skins automatically.
It was a good demo, but I still think Microsoft has them beat with Blend. The fact that Blend is a tool made specifically for Interaction Design is a huge jump in getting designers and developers to work together. It may take a bit to get that workflow down, but I think Blend has a big headstart in getting that part of the market.
The big bombshell for me was that Adobe is making it possible to design animations and transitions in Flash, then export those as SWFs and allow Flex developers to use those transitions right within Flex. We've been having a big problem with that in our app, so I think that's going to be huge in bringing Flash and Flex together from a workflow standpoint.