Yes, camera is mounted on a smaller robot, and you can even see it in the video. The motion feels natural because it's motion-captured.
As for the real-time rendering of scenes with motion tracking, here's an interesting Star Wars demo: http://www.youtube.com/watch?v=CdsFEMDceNg
The top comment on that link:
Don't be too proud of this technological terror you've constructed. The ability to render in real time is insignificant next to the power of storytelling.
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