Is this a good example of Air Layering?
Yes, that is pretty much how it works. IMHO, it pays to wait a day or two after you've ringed the bark (girdled the stem) as insurance that you won't get bridging - there really isn't a reason to be in a hurry.
I doubt that the layer harvested in this video made it. You should expect roots to be obvious on the surface of the sphagnum so that your layer roots look something like this before you harvest and plant it.
Even though you can cut the girdle most anytime, wait until spring because not much of anything productive will happen until the tree has leafed out.
I should start to Air Layer at the yellow line?
Yes or maybe somewhat higher - imagine the part above the layer as a new tree.
Photosynthate (sugars) and the hormone auxin (aka 'rooting hormone') are produced by the foliage and deccend downward toward the roots in the inner bark (aka 'phloem'). You've stopped this flow when you have girdled the trunk, just like you chopped the trunk instead. Usually this will result in buds being released below the girdle/chop, but sometimes it just doesn't happen. The roots then must live on starches stored from the previous season - when these run out the roots die and so does the tree. If you don't have a layer with viable roots yet, you've lost everything. This is why I suggest that you layer at the yellow line - foliage below to feed the roots. In 2018, you may want to try to layer the lower part of the tree off the grafted roots - if so, and it fails, you've still got the good part of the tree you bought for bonsai; if not you will have two or three trees (the root stock is likely a generic red or green palmatum that actually is a good species for bonsai - just chop of the remnants of the grafted variety).
There's a lot more stuff about layering here on BNut you should read over the winter - just use that search box on the right side of the menu at the top of every page (take note of the check boxes in the drop down).
