oh, I see. What about direct interaction, like with chests or shops?
Yes that will be supported too.
Adding on to this, will we be able to make menus via the API similar to in-game scripted menus?
Yes, using C# you can completely bypass the normal game GUI and create your own, if you want. You'll also be able to suppress all the current HUD elements, and replace them with your own.
In terms of the custom UI (that you see in the video), I have created a standalone GUI library which has types for basic controls like labels, buttons, datafields, listboxes, dropdowns, sliders, etc. The new GUI is built using that library, and modders will have full access to that library to either build their own UI that mimics the games one, or build a completely different UI.
Of course, modders also have the option to just do everything themselves using SpriteBatch.
Note: Today I'm building an API for modders to create their own Arcade games for the Arcade block.