So far, the development team have posted three diaries covering their progress, explaining how they're shaping the land by hand rather than generating terrain, even building the trees to order so they can get the right sort of shape and sense of scale. They've built a fortress, a forest and an area of abandoned farmland, carved out dungeons and created monsters of varying strengths with improved AI. They've also made this introductory trailer:
Much like MineZ, the idea is that you won't need any mods of your own to play the game either, only a vanilla copy of Minecraft.
If you're interested in donning your custom armour, recruiting a party of adventurers and traipsing off on an adventure somewhere, then Dungeon Realms is currently accepting signups for a closed beta. Head over to the (currently rather unfinished) official site, or have have a nose at the thread on the Minecraft Forums.
It's still early days yet and there's much to be done, but this is a project with tremendous potential. Once Minecraft's API is fully developed, we're likely to see a lot more custom servers like these springing up as Minecraft evolves from a game that people build in to a game engine that developers build upon, a platform for even more elaborate experiments. It's my prediction that things like Dungeon Realms are the future of Minecraft.