Action nodes are just strings that each ped has, defining their current action. The game reads this string to make the ped perform necessary animations/movements/attacks.
PedAttack, is a LUA function. The game uses LUA 4.0 as a scripting language to make things happen in the game. Certain functions in the Bully.exe are named a little bit differently, but they have LUA bindings for the functions to be usable by LUA. So Bully.exe runs scripts with the LUA 4.0 interpreter, which reads functions from the script, functions binded to do things in the EXE like set a ped's current coordinates, make them attack, bla bla bla.
Normally LUA is a scripting language that would get it's source read and interpreted, but in Bully, they need to get compiled, then the compiled code gets interpreted instead. This was done by Rockstar to prevent modding (didn't work though...)
"Interpret" btw basically means for an application (Bully.exe) to read a script, and perform some action based on what is in the script.
However... remember this:
You won't be able to get a completely detailed and 100% accurate answer however unless you got a Rockstar developer to come on and answer, one who made the way LUA scripts get interpreted by the game.
Or if the EXE is decompiled good enough to where it's code is readable enough to get answers... but decompiling isn't exactly the easiest thing to do, and still can be hard to get our answer even with decompiled code as decompiled code isn't perfectly readable.
