Here are a couple of pictures showing direct modeling. Here the user wants to increase the length of the part. So he picks the portion highlighted in blue and pulls is along one of the arrows of the gizmo.
As you can see no new features are added to the bottom of the feature tree. I think this is true direct modeling like how we know it, not direct feature editing or an Instant3D kind of a gimmick.
Now this is getting really interesting. I am meeting with SolidWorks CEO Jeff Ray in about 15 minutes. Let me see if I can pry some information about this from him.