The flight instructor reported that he was providing a discovery flight to a potential student. He completed a cruise flight and landed the helicopter to show the student how to hover. He lifted the helicopter to 3 to 4 ft above the grassy field north of the runway, and while having positive controls of the collective and anti-torque pedal, he gave the cyclic control to the student. While the instructor was "guarding" the cyclic, the student applied right cyclic and the helicopter descended, and the right skid contacted the ground. The instructor applied left cyclic, but the helicopter dynamically rolled over and impacted terrain. The helicopter sustained substantial damage to the main rotor system and horizontal stabilizer. The flight instructor reported that there were no mechanical failures or malfunctions with the helicopter that would have precluded normal operation.