The Dutch indies at Monobanda have created a true digital sandbox in the most literal sense possible -- one with real sand. Using manual labor, you shape and create an augmented reality landscape that is affected by, and projected on, a box with sand.
Up to four players at a time can use the created world to "control a ball that can roll around, jump and glide through the Mimicry world. Tiny virtual characters roll around in the sandbox. You can build obstacles for them or create a racetrack."
It looks like From Dust with real sand and without the god game elements to crude old me, but the project is certainly not lacking in creativity. Any takers for a box of sand peripheral? What about if they add sandworms and graboids? There you go.