There’s a vertex group on the hand mesh to isolate the shrinkwrap to the proximity of the tendons/bones, if that’s what you mean. There are Smooth modifiers for each as well to soften the transition, and those use the same vertex group to isolate the smoothing.
If only Shrinkwrap had an option to smooth the transition, it would be much easier to work with for this kind of purpose. I doubt the devs had musculoskeletal sims in mind when they implemented it though (and it’s so close to being that…).
I’ve just replaced the video with a better quality Youtube one by the way.
[Edit] And it’s at 3 subdivision levels, which gives me 30fps for the hand by itself.