Sir Isaac Newton was a smart guy, so smart that he whipped up not one but three laws of motion and relativity. The last one states that for every action there is an equal and opposite reaction. Put simply, for a bullet to fly out of a gun at high speeds, an explosion of gunpowder is required to accelerate it, and to slow or stop that bullet, something needs to absorb the energy of its motion. This is all physics, but similar concepts come out to play when it comes to human morality...if you shoot someone, you may be shot yourself or thrown in prison for life. In fact, this concept was the tagline for the original Fable: "for every choice, a consequence.”

The moral mire of good and evil, right and wrong and action and inaction have been something near and dear to the heart of game designer Peter Molyneux for almost 20 years. Starting with god games like Populous that saw you shaping an entire world to your will, his interests steered players towards a more interventionalist god in Black & White, before finally arriving on the Xbox, with Fable as their destination. It tells the tale of one extraordinary mortal, his quest for revenge, and how his choices can affect the people and places around him. The game didn't quite live up to the hype unfortunately, but it was still an enjoyable action-RPG, with role-playing that went a little beyond simply picking skills and levelling-up.

Almost four years have passed since Fable, and now Fable 2 has arrived, without anywhere near as much high-minded hyperbole from Molyneux. The result is a worthy sequel that flies much closer to the lofty heights the team at Lionhead aspire to, but still falls a little short of true greatness. But make no mistake; this is not another case of Icarus flying too close to the sun and crashing to his death in a puddle of feathers and melted wax, it's more like a flight on a 747: it's bigger, more robust, has more in-flight entertainment, and despite occasional turbulence and a few mechanical problems, the flight is quite smooth and enjoyable. Jokes about handling baggage and demonstrations of the location of your nearest exit will be provided as Downloadable Content.

Fable 2's opening act has a lot in common with its predecessor, in that you will begin your adventure as a child in a life that has already seen its fair share of tragedy. Orphaned at a young age, you and your sibling have been left to fend for yourselves on the mean, cobblestone streets of the city of Bowerstone. More than half a millennia has passed since the original game, and Bowerstone is a much bigger city than before, yet it feels empty, because all the heroes of yore are gone, killed by an angry and ungrateful populace. Yet the blood of heroes still flows through the veins of some, and Lord Lucien, the ruler of Bowerstone, covets the power of those individuals, as well as any relics he can find from that Old Kingdom. Longish introductory tutorial section cut short, you wind up with both a powerful relic and the blood of heroes in your veins, which puts you squarely on Lord Lucien's radar. The results are a dead sibling and a thirst for revenge, and this is where Fable 2 really begins.

The opening tutorial section is quite similar to the original Fable, and starts your character off as a child running errands to earn a few pieces of gold. But unlike the original, the choices you make here aren't just a minor sampling of the quandaries you'll face: one of your choices will dramatically alter the fortunes of an entire section of Bowerstone city! Wretched hive of scum and villainy or a prosperous quarter with high property values – it all hinges on one child's decision, and it's a fitting introduction to the new and improved Fable, with more meaningful choices to make, and much more significant consequences for those choices.

While external changes shaping the world around you are clearly the biggest improvement to Fable 2's morality system, your decisions will of course influence your character's appearance and the way the denizens of Albion react to your presence. There are the usual extremes of demon horns and halos, but where Fable 2 expands on this is by introducing the notion of corruption and purity in addition to plain old good and evil. Corruption is for things that aren't necessarily evil but aren't quite good for the community or for yourself – things like gorging on fatty foods, getting blind drunk, sleeping all day (and sleeping around!) or raising the prices of products at your shops or raising rent. Purity is basically living a simple, monastic existence, eating tofu and giving to charity, that sort of thing.

Your purity or corruption affects your complexion and how healthy your character looks, and when you combine this with the ability to get fat or stay thin depending on your diet, as well as how muscular or toned your avatar is, you've got the makings of a fairly unique character depending on the choices you make. Thankfully few things are permanent, so if after a week-long bacchanalia you look and feel like crap, you can always go on a tofu and apple juice diet until thing turns around! Of course if you get knocked out in combat, you'll be scarred as a result, and there's no getting rid of that unfortunately.

Fans of Fable will be instantly familiar with the combat system in the sequel though, ditto the character development system. Doing battle is a simple affair, the X button is for melee mashing, the Y button is for ranged attacks, and B is used to unleash magical mayhem. You can use any of these methods to dispatch foes and in any combination, but depending on what you use, once the life ebbs from your enemy it will trickle out onto the ground in the form of colourful experience orbs that are used to increase your hero's abilities. They're colour-coordinated with the controller's face buttons, which means that the green orbs that are dropped have no designated area of expertise, and this general experience can be spent towards any other ability.

The three areas – strength, skill and will – each have their own subset of abilities to buy, for example strength has toughness for damage resistance, and physique for damage dealing, as well as techniques you can buy that unlock new moves like blocks and flourishes. In addition to providing a boost to your characters stats (which are for the most part opaque), they will also adjust your appearance – physique makes your avatar more of a beefcake, while excessive magic use and purchases will make you look like a reject from Too Human. It's still a great system, and is much more engaging than the usual simple level progression of most RPGs.

While the system itself is great, it doesn't exactly come off without a hitch in Fable 2 thanks to the drive for the casual gaming market. Put simply, Fable 2 is easy. Really easy. Too easy. Your character will have maxed out all their abilities before you're even halfway through the game without you even trying, and if you use the abundant and cheap experience potions in unison with the generous combat performance multipliers, you can be overpowered even earlier than that. It's disappointing that there's no way to up the ante for more experienced players, and it's one of an unfortunate number of compromised design decisions made to pander to exactly the sort of audiences who weren't interested in Fable in the first place.

In a lot of ways, Fable 2 is the very definition of action-RPG lite, and with the action-RPG subset already being the lite version of the RPG, that means that Fable 2 is an incredibly simplistic game, even more so than the original. It's Molyneux's own choice-consequence system coming back to bite him on his British bottom: the more traditional role-playing goodness you remove, the more your game becomes less an RPG and more a medieval version of The Sims. There's nothing inherently wrong with this, but when the team at Lionhead removed armour value from clothing because they wanted people to be able to wear whatever they thought looked pretty without being penalised for it, well, that's when you know your game hasn't just detoured away from the RPG genre, it's hopped on the highway and left the state.

Still, the new destination isn't so bad, provided you don't have your heart set on most of the usual RPG trappings. Two of Fable's more unique features have been greatly expanded upon in this sequel: the expression system is much easier to use and has a lot more variety, and property ownership is a lot more detailed and beneficial now as well. An expression wheel can now be pulled up with the push of a button rather than requiring you to delve into menus and bind them to the D-pad, and they're broken up into categories like social, romantic, rude and humorous, so you'll never accidentally fart at someone you're trying to impress! Better yet, the inhabitants of Albion have been given a little more personality of their own, and you can select any NPC you encounter to find out their likes and dislikes, which allows you to express yourself in an appropriate manner, or shower them with the right kind of gifts.

Becoming the Donald Trump of Albion is even more fun though: every property you encounter in the game is available to buy, be it a shack, market stall or even the town pub. The price is affected by a number of factors like the local economy or how well regarded your character is by the current owner, but if you've got enough gold, everything is for sale. Hell, even if you don't, you can just kill the owner or half the town...it's a great way to drive down property values in the area! Once you own a place you can set its rent or how much mark-up there will be on items, and of course this affects your corruption or purity, but no matter what you do you'll start earning money. Money trickles in every five minutes or so, even when you're out adventuring or even if your console is turned off!

Albion is a world full of distractions like these...you can take a job at the blacksmith, split logs for coin, or engage in a variety of repeatable mini-missions to free slaves, collect bounties or repel monster invasions. You can play dress ups with your character and your houses, play some games at the pub, or engage in one of the numerous side quests that pop up from time to time. It was one of the main criticisms levelled at the original Fable that there wasn't enough to do outside the main quest, and the team at Lionhead have really worked hard to ensure that isn't the case here. In terms of quantity they've definitely succeeded, but the quality of these diversions is less of a triumph thanks to their repetitive nature, although some of the side quests are great and have some nice rewards.

The other major criticism the sequel addresses is the linearity of the levels and environments, which often felt like pretty corridors you ran through to on your way from A to B. Fable 2's environments are as beautiful as they are expansive, and while there are still the obligatory narrow sections you'll be funnelled through to advance the story, there is a lot more scope for exploration and generally just meandering about in. There's a quick-travel system though so you can move instantly between locales if you want to, but this often means a number of annoyingly long load times. Travel also requires in-game time, so you may find yourself arriving at your destination in the middle of the night and all the shops are closed...while realistic, this too is a bit of a pain.

So does all this newfound openness and freedom overwhelm? Thanks to that handy segue we can now talk about Fable 2's most innovative new addition: the dog. If you've been following the game you'll know about your pet dog, but in case you missed Peter Molyneux waxing lyrical about it at any and every Goddamn opportunity, allow me to elaborate: you have a pet dog, and the dog acts like your map, compass, HUD and all around helping hand – think of him as a guide dog, except you aren't blind and he didn't take 10 years and a lot of gold coin donations to train! Your dog will always gravitate towards the best path to your next destination, as well as find buried treasures and growl when enemies are nearby.

The dog is really the shining triumph of Fable 2, because unlike so many of the choices and narrative twists, it isn't something forced down your throat or foist upon you in a heavy handed manner. He's almost always there being helpful, but he's never obtrusive or even terribly central to the game, just your faithful companion. By the end of the game, you'll have formed a deep emotional bond with your dog – who you can name and who also changes appearance based on your alignment and preferred fighting style – and it's an emotional bond that is actually worked into the story quite deftly. In fact to Fable 2's credit, the endgame is much better than the original's, and your final choices are much more impactful than the stupid selections offered in Fable.

Of course, the flipside is that there's no map, compass or HUD in the game, which can be problematic. There is something that Lionhead alleges is a map tucked away in the menus, but it is roughly the size of a postage-stamp even on my 40” HDTV and about as legible as fonts in Dead Rising on an old CRT tele. This sense of compromise pervades all of Fable 2 really, and the visuals are no exception: the game looks great, but the load times aren't, and the pop-up of objects like grass, trees and even buildings is profound. There's a lot of graphical glitches, too, with enemies getting stuck in objects, walls disappearing from buildings and a legion of other minor quibbles in a similar vein. More ominous still are the gameplay glitches, some of which can render your save file corrupt and require you to restart the game from the beginning.

While we're on a negative note and talking about things being compromised, Fable 2's co-operative play warrants a mention here. It's a pretty worthless inclusion really, where player 2 is basically just a minion of player 1 and they cannot play their own character. Worse still, the camera is locked and the perspectives fixed as though you were playing split-screen...which is fine if you are playing split-screen, but over Xbox Live it just makes for a horrible experience that really wasn't even worth including. The only saving grace is that your second-fiddle playing friend will keep their gold and experience, although the host can decide just exactly what percentage of each they'll get!

While the co-op is a bitter disappointment, the other Live Enabled features are much better. Players on your friends list (or even other people around your level and location!) will show up as glowing orbs in your game world, and will move around and go about whatever business they're attending to in their own game world. While it's fairly simplistic, it lends Fable 2 an MMORPG feel, and it allows you limited interactions with other players to trade items or just chat instead of getting on with the business of saving Albion!