(Correction). The article is saying that 133ms is likely to be the complete lag from the whole input, rendering and display pipeline, and does not say much about what the controller adds.
What we are looking at here is this:
1 The camera sends its picture data to the PS3 over the USB connector
2 The wand sends movement and position data to the PS3 over the BlueTooth wireless signal (based on its magnetometer, gyroscope, accelerometers and whatnot.]
(1) and (2) happen in paralel
3 The video input from the USB camera is streamed to the SPE that analyses the signal for the Move controller's led
4 The results of the analysis is used to enhance the precision of the signal from the Move controller
(4) is extra, and is what Sony is talking about when it says it can typically do this within one frame, I'm fairly sure
5 The video input is streamed on towards a framebuffer on the graphics memory
6 The graphics engine receives the controller input from the SPE and uses it to determine the location of the sword
7 The graphics engine renders the sword
(5) is probably done in paralel to (6) and (7)
(6) is the location where controller smoothing will typically be implemented, potentially adding some lag
8 The sword and video input are combined into a framebuffer
9 The framebuffer is switched to become the active displayed image on the screen
How the lag that is purely added by the Move controller is experienced will eventually depend on the functionality that is used inside the Move controller and the time it takes for the camera to grab an image to the SPE returning positional data from it that can be combined with the Move controller's input (1),(3) en (4)
Additional lag can happen in the smoothing fase (6)
The minimum amount of lag from the Move controller is probably in the 22ms ballpark as suggested by the screenshot posted earlier on in the comments.
How much this differs from, say, getting input from the analog stick of a dualshock3 controller I don't know off the top of my head, but there will be a difference, maybe 16ms or something similar?
Also interesting to note is that the button inputs may not be influenced by the input of the camera. This depends on how the threading and data stream model of the driver works, and that is currently anyone's guess I think.
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