In broad outline it's "immersive journalism" and documentarist/scholar Nonny de la Pena posts on the process at Online Journalism Review. She identifies the best practices in the emerging field that aims "to afford the participant unprecedented access to the sights and sounds, and possibly, the feelings and emotions that accompany the news."
It's a fascinating new area (examples here), clearly resource-intensive but very different from news gaming in that it doesn't amount to a contest that accumulates points and plays within a protocol. Rather, it's an experience that responds to events and doesn't affect an outcome.
It's not for every newsroom, but the technique offers a distinct way to tell stories.