A List of Things We Know

All information in this thread is subject to change and does not reflect anything that may or may not be put into the final version of Fable 2.  This is not an official document from Lionhead and is instead a document mantained by fans of the game; as such, most information presented here should be taken with careful speculation and should not be read with the assumptions of a fully complete or accurate feature list.  All content within this thread is subject to change.
This thread contains feature and story spoilers.  If you don't want to have certain elements of the game ruined for you feel free to overlook certain sections per your discretion.

Fable 2 is being developed exclusively for the Xbox 360.  The Fable 2 design document was 1,364 pages as of 14th August, 2006.  Sketches were rendered using the engine from Fable: The Lost Chapters in order to get a vivid look at the world and it was then transferred to the new Fable 2 engine.  The XBL mini-game Keystone was developed by Carbonated Games.    Fable 2 will be released in late 2008.   

Fable 2 is using its own in-house engine that Louise Copley, Fable 2 executive producer, called the "Lionhead Engine".  It is currently being exclusively used for Fable 2 but may be used for other Lionhead projects in the future. 
Havok is being used for the physics in Fable 2.  Lionhead has licensed Kynapse for Fable 2 for pathfinding.  Kynapse is an AI software for real-time behaviour simulation, used mainly on NPC's.  Height maps are being used in Fable 2.  SketchUp is being used to make quick 3D models for initial drafting of areas.  Lionhead is using AlienBrain 8 to track assets such as 3D Models, files, and art. 

Fable 2 will take place 500 years after the first Fable. 
  You begin the game as a child somewhere around 8 years old.  The world of Albion has forgotten about heroes.  The antagonist of Fable 2 is going to be a character named Lucien.  The story opens by following a bird in flight.  The bird flies over a landscape and shortly after lands on a tower then "takes a dump".  The camera follows the dump down and then it lands on this kid's head, thus being the main character.  In the story you are destined to bring together a group of heroes.    There are a few characters from the first Fable in Fable 2.  You are one of the last heroes in Albion.  You will revisit the Guild.  Six hours into the game you will have to sacrifice something precious.     

There is a small campsite in the middle of a large forest called Brightwood.  
Bowerstone returns for Fable 2.      Bowerstone has different districts, such as the slums district and the rich district, as well as a merchant street.    Bowerstone has 4 regions, each of these bigger than the entirety of Bowerstone from Fable 2.  These include South, North, Lady Grey's Castle, and then Quay.  There are many places to explore beneath Bowerstone.  Each tree, as well as the tree's branches and leaves, are animated individually according to their own unique physics.  Albion is 10 times larger than in the first Fable.    Each tree in Fable 2 has roughly 120,000 leaves each.    There are around 15 million poppies in Albion. 

A second player can come in and out of the game at any time as a guest.  This player keeps all gold and experience they earn and takes it with them back to their own game world. 
The host can determine what share the guest gets of the gold and experience gamed when the guest is in their world.    Guest players will get an hourly rate of pay for helping the host out.  Guest players can kill the host player's family.    NPC's will be able to recognize and respond to any guest playing with the main player.  For example, if you have an evil guest with you and you're a good character, people will react accordingly.    If you go into another persons game as a guest the look of the character will be based off of your character's look.  If you don't have a character of your own you'll have a generic pre-determined look to your hero.  The host can give the guest items to take back with them to their own game.    Demon Doors are returning for Fable 2 and are still only opened by meeting certain requirements or performing certain actions.  Some can only be opened in co-op.    The game world will alter according to your interactions with it.  If you trade with a small camp you may find that it's given the camp the push it needs to turn into a small settlement in the next 10 years.  Good and evil are being tracked as well as rich and poor, and both can affect your physical appearance and how the world reacts around you.  Morphing is going to have a large part in Fable 2, with the different morphs relying on , , corruption, purity, strength, will, and more.  Experience is affected everytime the player passes out or collapses during a fight.  Because so many people played as good characters in the first game it's going to be more difficult to be good in Fable 2.      A dog is going to be the main characters main companion in the game from near the beginning on forward.      You can use expressions towards the dog to help train it.  The expression system is back for the main character, including some expressions such as "flirt" and "pose", among others.    You will have no direct control over the dog.   You can play with your dog, such as throwing it a ball to play fetch.  Your dog works with with you to alert you of danger, hidden areas, and assists you in combat.    Your dog will morph according to your actions as a player.  If you're a good character your dog will look pleasant. If you're an evil character your dog will appear scary.      If you go into a fight with your sword drawn your dog will attack the gun-wielding enemies first and vice versa.  You can feed your dog but you're not responsible for feeding him.  If you overfeed your dog it can become fat.  The lower your health is the closer the dog will stay to you rather than venturing off further down the path.  A gambling mini-game called KeyStone (a cross between roulette and craps) will be released before the release of Fable 2 on Xbox Live.  Any money won in the game can then be imported into Fable 2.  This game will cost points to download in advance but will be included for free in Fable 2.    You'll get more experience for a good "style" of fighting and less experience for "button mashing".      Instead of picking up gold from enemies you'll have to rely on getting gold from gambling or various jobs offered around the world.  You will also get no gold for completing quests.  Jobs you can have include blacksmith, farmer, assasin, and henchmen.  The more you work at a job the more your skill in that job will increase.  Village shops will offer you free items as thanks if you happen to have saved that village from a particular evil.    When you marry somebody you become a part of that community.    You can have a dowry during marriage.    Due to marriage you can have a father-in-law.    Instead of mini-maps there will be a new breadcrumb trail.      If your spouse is killed your son or daughter will have to go to an orphanage.  You can purchase and own any building in the game, ranging from dungeons, houses, inns, to castles.        Most buildings or structures you can buy have specific quests associated with them.    You can play as a male or female.    You can get married and have children.    Just as in the first game same-sex marriage is possible.  The appearance of your children will be determined by the appearance of your spouse as well as that of yourself.  If you leave home for too long your family will react accordingly upon your return, either by being very happy you're back or by being upset that you've been gone for so long.    If you're evil your child will exhibit evil characteristics.  If you're good your child will exhibit good characteristics.    As the breadwinner of your family you will be responsible for your families survival by making sure they have enough money to eat, etc.    You can have protected or unprotected sex.    If you play as a female character you can become pregnant.    Combat will be used via a one-button system.  There will be one button for your sword, one for gun, and another for magic.  This kind of combat is based off of timing and positioning of the character.         Combat will be position oriented; your character will interact with the environment around him to help him fight.          You can pick up and throw bottles at enemies.     Your combat style will change according to the kind of weapon you're using.  The player will unlock more skills and combos with particular weapons as they become better at fighting.  Aside from swords and magic the player can use guns.  The player can use a more accurate aim with a crosshair during gameplay.  Hobbes will be making a return for Fable 2.    While Peter says you can complete the main story in 12 hours if you rush through it it would much longer to do everything in the game.