He did. He said that graphics are usually done at the Xbox level, because they're "smoother," and then most of that is transfered to the PC.
What he meant is that since the XBox 360 has fixed hardware, any graphics made for it (and any console for that matter) can be super finetuned to work as smoothly as possible, i.e. no frame cuts or choppy animations. The PC, on the other hand, is an endless continuum of various hardware combinations, and adapting a console game to look better on it isn't really that hard. If they did it the other way around, however, the console graphics would suffer from it, since you can't go from wide to narrow that easily when it comes to hardware.