For demoing, I'd definitely add lines between the nodes being drawn. Also, seems like you got quite a jumpy knee.
Is there any interpolation happening or are we seeing raw input right now?
Yes, the kinect skeletal tracking system outputs x y z
Where z is distance from the sensor as values between -1 and 1 that represent meters from center of the sensor.
In the demo those values are being scaled to proper screen pixel coordinates.
Also the picture in the background is converted from the raw data that the RGBA sensor captures to vertexArray.
About the right knee...
Le wild office chair appears! Kinect tries to use skeletal tracking system, it's not really effective :-P