Look at the example given under 4-5 which I already posted above. They're not pausing to let each other do a pretty technique like the kung fu class are. They're not using any power, there's negligible risk of pain, but the tempo is not compliant. There aren't time gaps you can drive a monkey roll or a 'badass' jump spinning kick through.
They're doing something more like 3.
"2-3: Compliant partner drills, board breaking, point sparring"
What we're looking at is on the borderline between a compliant partner drill and point sparring. It's improvised, but it's being done with the stilted tempo of people trying to choreograph a fight scene, so that their training partner has a chance to use cinematic techniques. What they're doing would get them owned in a light-continuous point tournament. What they're doing is improvisational XMA.