The top of the rounded lower end of the femur is important because this is where the 'groove' begins inside which the patella tracks.
The keyhole surgeon is able to explore this region by inserting the arthroscopic camera into a pouch which exists above the kneecap (patella), and looking down towards the patella. The capsule is first inflated with fluid to make things easier.
The first illustration shows the bones of the knee with the watertight inflated capsule. The red arrow shows the angle at which the surgeon gains access via the arthroscope into the upper part of the knee joint. This is called a 'suprapatellar' view and what the surgeon sees is similar to that of the second illustration.
From this special suprapatellar perspective the surgeon is able to bend and straighten (flex and extend) the joint while observing the engagement of the top end of the kneecap into the underlying groove (trochlear groove) of the thighbone (femur).
You will be able to watch this in the video below.
In this video the surgeon begins with the knee almost fully extended, and you can see that in this position there in no engagement. The first part of the video shows the surgeon gently testing the engagement while flexing and extending the knee a few times just through a few degrees. Then the surgeon flexes the knee properly, and you can see the patella slipping 'over the rim' to engage in the groove.
The 'curtain' stretching across the frame in the top left is a suprapatellar plica, or fold of joint capsule, which usually does no harm. The other bits of 'fluff' floating around are just debris from the joint capsule - floating because of course the knee is filled with saline under pressure.