The code just guesses where elbows should be. There's still a room for improvement (for starters, getting actual length of arms). And it varies form person to person how they hold their arms - without additional input it will be always a guess.
Although I hope that eventually, when it is applicable, they'll add a way to check whole arms. There are cameras on headsets, right? On Quest in particular. And hand tracking is there. So why not provide an info about the elbow?
The biggest problem that there is with the arms is that you may want to push buttons on forearms and when forearms in real world match those in game, it feels very good when you try to press a button and the finger touches your forearm. But when they differ, it may feel weird or just bad, especially when the forearm in real world is closer that the virtual counterpart.