I can't speak to the specifics in this video, but if you want a detailed, text-based explanantion of HFT shenanigans, there's tons of technical details at http://www.nanex.net/flashcrash/ongoingresearch.html (algos crashing exchanges, running wild and losing insane amounts of money only to have those losses rolled back [sometimes], algos reacting to news a few seconds before it's officially released, etc).
I've seen Nanex's pretty graphs, but I've never seen an explanation from them. All they do is highlight graphs with wild oscillations and then declare "ooh, evil!"
Because they get the benefit when they fat finger as well. HFT firms tend to actually have more risk than big investment firms. You'll notice that when Knight Capital had a program run wild they went out of business (for all practical purposes). When Goldman did they had their trades busted.
