The Dataform grading is highly flexible (just like other Dataform features). To begin with you can set either a single grade item via the activity settings or multiple grade items. In each grade item the grade is composed as a formula which aggregates values from supporting fields, currently select, ratingmdl and entrystate.
Who's grading who is just a matter of who can edit the fields that are included in the grade formula. So you can have students grading students, teachers grading students, students grading teachers and any other combination you can think of. You can, for instance, send students grades to one grade item and teachers grades to another so as to distinguish these grade components in the grade report.
What may be confusing in the example preset available in this forum is that when students enter the activity they seem to have no way to submit their work. The reason is that the preset doesn't include submission entries. At this point, the submission and review entries have to be created by the teacher on behalf of the students. The best way to create these entries is by csv upload via a designated csv view. You create the list of entries (entryType and student/group) in a spreadsheet and import into the activity. Then when students enter the activity their respective entry is there for them as if they created it, and in separate participants mode each student will see only his/her entry. Then they can proceed to edit the entry and upload the submission file or enter the submission data as the case may be.
The review entries are created in a similar way, that is, the allocation is prepared outside the activity in a spreadsheet and then the entries are imported into the activity. This can be done either before the activity opens, or between the submission and review phases.
I'm working on a way to allow the students to create the submission and review entries on their own, but this may take some time to complete.