That's probably the limitation of the robot. I would wager that the same software with a different (faster) robot could move way faster, and that would probably look more like sword fighting (this does not to me ...)
In real sword fights the defenders jobs is to deflect the attackers stroke (more or less). If you'd just try to stop it (physically reversing the attacker's impulse) that would either not work at all (because you don't have strong enough muscles) and the sword would still hit you. Or equally bad, the sword or your bones break due to mechanical overload.
Now according to the description the robot simply pulls back if it hits resistance, which results in the fake looking moves. Deflecting a stroke probably wouldn't work because of the robot's mechanical structure is much more rigid than a human's.
Slow-motion sword combat works/looks much better if the fighters are aware of how it actually works when not simulating the moves.
Amend: The "physically reversing the impulse" is a bit hand-wavy. You just have to put an equal momentum into your own sword directly opposing the momentum of you opponent's sword. Now if your attacker goes in for the long haul, he has about a meter of movement to put the momentum into his sword, whereas the defender usually has much less. This therefore requires much more force resulting in the above consequences.
That arm is the KUKA Light Weight Robot (LWR) Arm, which was developed by the German Aerospace Agency (DLR) and called the DLR III LWR [1]. It can move _MUCH_ faster than in the video. It likely moves that slow for the safety of the human and itself -- it costs ~$150k and the high-speed movements create a lot of momentum.
Incidentally, this was the same arm used in the "knife-stabbing experiments." [2]
That's probably the limitation for safety. It is frowned upon to have fast-moving robots around fragile humans. The foam sabre is harmless, but I wouldn't have my skull near the mechanic hand.
