Given the "Milo Demo" for Microsoft's Project Natal was shown - and presented - by Lionhead CEO Peter Molyneux at E3, it's not really surprising he would finally come out and declare Fable 3, which was equally recently revealed, would support the innovative new motion detection technology.
According to VG247
, Molyneux announced the inclusion of the tech at a BAFTA lecture (the revelation of which was then Tweeted by another party), which was later confirmed to be true. No specifics were given but you can start guessing at what might be included in the game with Natal functionality on board.
My guess would be a hybrid controller/Natal interface where you interact with NPCs in the same way the Milo demo showed off, while moving your character around the game-world. That or the whole thing will be Natal which, after playing with Natal at TGS, to be perfectly honest, would really suck.