That is a well produced video, and while I doubt any video can adequately convey the experience of using something like this, it comes near to the mark as makes no matter. Two unfiltered reactions: discretised theremins are missing the point of a theremin, and defocusing to avoid device frame rate issues isn’t worth it—just simulate screen images.
Yeah, this needs a "fretless" version. It's interesting how the discretised version sounds much less creepy, though.