Item form is a new form that allows to use items as forms. However, not only that, it can also take the item from the entity’s equipment slots.
Meanwhile, form option for items allows to specify a form that will be displayed in the world or in an item form.
The dagger (sword) model that was shown in this video is by Meow-Vortex on SketchFab:
Note: BBS isn’t a mod. BBS is a standalone application written in Java, which is designed to be a powerful sandbox for creating machinimas and maps/mini-games. If you’d like to try it out, feel free to join BBS’ Discord server: