In one single moment, I realised that Infinity is, quite probably, a work of genius. I was at a Disney demo event in London, exploring the Toy Box mode, a vast creative pleasure dome where you use dozens of objects, buildings and tools to construct your own mini Disney adventures. I'd created a race track that culminated in a giant ramp, and now I was about to zoom across it in Cinderella's fantasy carriage – except I had tricked it out with monster truck wheels. Oh and the ramp went over the Epcot centre's Spaceship Earth. And it was being patrolled by Recognizers.

And suddenly the possibilities just kept opening up ahead of me. I could drop in a stadium full of cheering people, or I could place a physics action on the finish line that would set off a firework display. Or I could plonk in a Phineas and Ferb water park, or … Or I could abandon the project and get my character to ride around on a shrunken elephant.

Disney has always been about the realisation of childhood dreams, but too often the video games have fallen way short of the movies and theme parks as vehicles of imaginative desire. Infinity though, seems to be all about the possibilities presented by these characters and stories. It is like mainlining Disney magic.

Of course, most conversations about Infinity place it beside Skylanders, Activision's hugely successful role-playing adventure. That game added the ability to place dedicated action figures on a special USB-connected plinth, transferring their likenesses into the virtual environment. It was the perfect synergy of toy and game, and it has made Activision billions of dollars.

Go figure

Disney figures Photograph: Disney

Infinity uses the same basic recipe: you buy the game as a starter kit, with a USB plinth – or Infinity Base – and a collection of three figures: Captain Jack Sparrow from Pirates of the Caribbean, Mr Incredible from The Incredibles and Sulley from Monsters University. Each figure opens up a different narrative adventure within the game – and buying more Playsets gets you access to new quests. Plus, as in Skylanders, each action figure toy retains the player's data, so they're handy save files too.

You can't belittle this element of Infinity – it's going to be huge. At launch there will be just over 20 figures to collect, each one beautifully designed (just like the Skylanders toys) with vibrant colours and neat, intricate details. The game's developer, Avalanche Software, has constructed a narrative in which it's the toy versions of the characters that come to life in the games, not the movie characters; so the action figures have a slightly angular appearance, reflecting the polygonal nature of their onscreen counterparts. It's a neat way of ensuring a subtle, exclusive relationship between the figures and the game. You can imagine the years of R&D and marketing experience that went into all of this.

But it doesn't stop there. Added to the figures are the power discs, which will be sold in packs of two for £3.99 and which can also be placed onto the Infinity Base: the hexagonal ones change the themed backgrounds in the Toy Box mode, while the circular ones can be placed under the action figures on the base to buff their powers or give them cool new gadgets. This is the true masterstroke really. The Playsets (which provide access to the Playset adventures in the game) retail for around £30 each and the figures go for £13, which puts both into the birthday/Christmas/special treat category for most kids. However, the power discs are within pocket money range – and can be placed on top of each other in the Base to unlock extra capabilities, so you'll want lots of them. As a seasoned toy manufacturer, Disney knows how to build licensed goods into spectrums of affordability – whatever a kid has, they can spend it here.

How should we feel about that? Well, you know, collectibility has been a part of toys since the arrival of mass manufacturing. Our parents hoarded Corgi cars and Hornby trains sets, while my generation saw the dawn of cross-promotional play, with Star Wars figures, Transformers and themed Lego sets. These days the likes of Pokemon, Games Workshop and Moshi Monsters all use vertical branding to lock us into lucrative product relationships. It's tough for us parents, but this is the way merchandising works.

Campus capers

Disney monsters Photograph: Disney

The responsibility for Disney is in ensuring that each purchase provides plenty of playability. So in Infinity, when you buy a Playset from a new franchise, it opens up a dedicated adventure in the game. I got a quick play on the Monsters University Playset, which takes place on the campus and involves competing against educational rival, Fear Tech. This college is barely mentioned in the film, but it becomes the focus of the Playset story – and apparently this is how all the character adventures will pan out; exploring lesser-known facets of the universe rather than re-playing familiar movie plot lines. Although there are mission objectives, the environments are wide open, allowing exploration and experimentation. Sulley is able to pull pranks on his fellow students, for example, replacing newspaper stands with slingshot devices to fling them across the campus. It's diverting stuff with lots of hidden items, cut-scenes and fun dialogue. Apparently, each Playset adventure is around four to six hours long, although as they're open and explorable, 10 hours may be a better marker.

Furthermore, progressing in the Playset adventures opens up new items and objects to use in the Toy Box mode, which for me is the main draw. Like LittleBigPlanet, this is an immensely powerful level creator, jammed with objects and characters. As well as generic items like trees, tracks and stadia, you can slap in a few Recognizers from Tron, some vehicles from Cars, Ramone's House of Body Art, the Disney castle … A simple set of menus placed on the shoulder buttons gives access to all the tools, as well as useful modifiers like an enlarging gun, and a Buzz Lightyear jetpack to get your around the landscape faster.

Better still, there are special 'Creativi-toys', which can have physics behaviours and switches attached to them. Confetti cannons, slingshots and score boards can all be hooked up to create functioning traps and interactive elements.

As in LittleBigPlanet, then, players may craft their own gadgets and mini-games. According to producer John Day, one coder has already managed the old LBP trick of producing a working calculator; others have manipulated the camera into different 2D views to create Disney-themed versions of Donkey Kong and Gauntlet. All the Toy Box environments allow up to four players to co-operate or compete – so if you want to build a pitch, drop in a scoring mechanic, and play football while galloping about on Bullseye, you can.

All your creations can be saved and uploaded to a dedicated site; moderators will then play through, select the best and make them available to other players. Cleverly, the saves are cross-platform: if you build a great Toy Box world on PS3, someone else will be able to download and play it on their Xbox 360.

Infinity, then, is a surprisingly ambitious project; a huge creative universe set to grow alongside its range of action figures and add-ons. As a parent, I know that my sons are going to bloody love this game, and I will have to manage their appetite for new stuff. That has been tough with Skylanders: my youngest has just saved his pocket money for four weeks to buy the Tree Rex character, while the Giants and Lightcore figures are well out of reach – both for him and usually for me as well. But as Minecraft addicts, I know they'll be fascinated by the Toy Box mode, which broadens the scope and playability beyond simple toy collecting. If we are entering an era of connected toys, this sense of value within the game element is going to become ever more important.

And really, Infinity seems to be what Disney games should always have been – an imaginative platform that is genuinely for the whole family. It is filled with fun little ideas and features that my kids probably won't even get; for example, the Wreck It Ralph cherry bombs in the Toy Box mode that generate 2D sprite-based explosions like old school shoot-'em-ups. While most previous Disney games have reduced the franchises into conventional, boring action adventures, Infinity appears to be infused with the Pixar spirit of 'plussing' – adding new features, gestures and elements at every stage of production.

This will probably be the best Disney game since the Mega Drive era, since the brilliant Castle of Illusion and Dave Perry's wonderful Aladdin tie-in. But standing as it does, at a crossroads between LittleBigPlanet, Skylanders and Minecraft, it has the potential to be much, much more.

• Disney Infinity is due out on 20 August for PC, PS3, Wii, Wii U and Xbox 360

Infinity and beyond: how much it will all cost

Disney :Lone Photograph: Disney

To play Disney Infinity you'll need the game itself, an Infinity Base and at least one Playset. When the game is launched, a special starter pack will be available that combines the game and a Base with three Playsets: Pirates of the Caribbean, The Incredibles and Monsters University. Each Playset provides access to a dedicated adventure, based around that movie or franchise.

The starter pack retails at between £50-60, and extra Playsets will be around £30. Currently, there are only two extra Playsets available – Cars and The Lone Ranger – but more will be released shortly. Each playset includes two action figures as well as the Playset disc that needs to be placed in the Base to unlock the dedicated content.

Fans will also be able to buy separate action figures at around £13 each. These alone won't open up new Playsets in the game, but if you already have the relevant Playset then your new figure can hop into the game. For example, in the starter pack you have the Incredibles playset for free, but then you can buy the Mrs Incredible or Syndrome action figures and pop them on the base to switch roles.

Finally, power discs can also be bought in packs of two for around £4. These add themed environments to the Toy Box modes as well as extra skills, vehicles and weapons to your characters in the Playset modes. Like packs of Moshi Monsters and Lego figures, the contents are hidden so players will no doubt end up swapping duplicate discs with friends.