I got mixed opinions here. There are parts of the drill that I see great value in - so I was coming to it first from that point of view. In that perspective, I was not understanding the drill to be at all relative to fighting with a knife (i.e. as a weapon used to gain or maintain a tactical advantage over another), or even fighting in general. I saw it as working upon one aspect of fighting, one that is relative to Aiki and that is very hard for newbies to pick up on due to fear and attachment often going unreconciled.
What I saw was a new practitioner (the deshi in the video) tapping into a particular body/mind relative to Aiki tactics via a very commonly held understanding of using a knife (i.e. it cuts, and I have to move it to cut with it = I move). In other words, I saw folks using a basic element of cutting with a knife to get their body to keep moving, which is very much akin to Aiki tactics, especially when facing multiple attackers. That is a very good thing in my opinion, and, in fact, we too have used a knife as a training tool in a way similar to this. Of course, there is moving and then there is moving, but initially I found it better to start with contrasting moving with non-moving when it comes to getting students to unfetter their body/mind. Thus, I can see the value in this type of training, understanding it to be working on one very basic element of the art.
In contrast, for example, if you take folks with equal experience and stick them in that kind of training environment, but without the knife in their hand, I would pretty much let everything ride on the result that they would not keep moving but would, instead, and wrongly, attempt to stand toe-to-toe in front of one attacker - which would only result in he/she being overran by the second or third attacker (i.e. their inevitable defeat). Again, from this perspective, I think the "knife" as a training tool, one that is more likely to get a new practitioner's body moving and keep it moving, even within situations where they are more prone to stand still (i.e. stressful situations like fast moving multiple attackers intent on taking you down), is a very good thing.
Here's an example of how we ourselves tried to use the knife and its moving nature to "inspire" new folks to unfetter their body/mind and to problematize those things (and bring awareness to those things) that make a body/mind fettered. In the video we are using a basic feed-pass/check-feed three count rhythm to do this and, consequently, to help "put kihon waza together" (or wipe their divisions away - which ever angle you prefer) - which while not about fighting does tell you how fettered your game is or not, which does tell you how where you are in training.
Aside from that, if one were opting to come from the point of view of knife fighting or knife attacking, or even just fighting in total, while there may be some parallels, ones that may in fact be part of the key elements necessary for gaining the training benefits I mentioned above, the drill in Chris' video starts to lose water - because it may be trying to accomplish too much too fast with too little. However, this does not take away from the fact that Chris' students will probably move way better in a basic randori drill than anyone else's students of similar experience who have never done any kind of drill similar to this. (My opinion)
That said, I also think, however, I am not of the mind to say that "this" or "that" is a real knife attack. So I would never critique the drill from that perspective. For me, what makes "reality" reality is that it can consist of anything. Thus, I would never say, "Oh, that's not how a real knife attack would be committed!" "It's like this, not that!" For me, reality is what reality is, and that can be anything. So, you might face something exactly like this, you might face something totally different, etc., and one would be the fool for seeing one thing once, or even more often than not, and thereby look to something else and think, "I'm never going to see that, so forget it." Again, the real is the real, and what makes the real the real is that it can be anything - always, never, and forever.