The two companies are envisioning a future where gaming consoles integrate the bear minimum computing power for CPU-based tasks, but rely on cloud-based GPUs to process complex graphics. Games would have an instance running on the local machine and another running in the cloud, and the cloud framework stitches the two concurrent instances into a seamless experience.
https://www.notebookcheck.net/AMD-and-Microsoft-working-on-next-gen-cloud-gaming-console.331512.0.html