The system is very simple.
The current prototype pointer uses a small LED and battery, it has a switch that turns the LED on when the pointer is squeezed.
When the LED is switched off (or is not detected by the camera) the recorded movements are moved to the left and a new drawing point will start the next time the light is detected.
Code is heavily based on the tracking.js library - see: https://trackingjs.com/ and is based off one of their example applications.
A video of how it works (at this point):