How can this STOL plane fly so slow?
Yes, yes and yes:

At that event the winds were 12-15kts.
There is some lift increase from propeller wash impinging on the inboard wing and flap. But most airplanes benefit from this (my own PL-2 has flaps that go all the way under the fuselage and the sink rate difference power on and power on is a lot).
Propeller thrust is contributing to the total lift as soon as the thrust line is tilted above horizontal, as a vertical component is added to the thrust vector. With a slatted wing allowing the wing to operate at up to 25 degrees AOA with the associated deck angle, engine power is starting to contribute a significant part of holding the plane up (if a 300lb thrust force is inclined 25 deg, the vertical thrust or &quot;lift&quot; component is about 130lbs), which is why it plummets the instant the power is removed (to better imagine the effect, just imagine you cankeep pitching the plane's deck angle to 90 degrees, where ALL of the lifting force is coming from the prop).

So, an ultralight like that should have no problem slowing to 21 or 22 kt in that configuration (a Zenith 701 can maintain control down to about that speed although its published stall speed is 30 mph or 26 kts), dropping another knot or two as it gets into ground effect, add in the head wind that was present, and you're down to a ground speed of a person running.
The headwind is kind of &quot;cheating&quot; in terms of absolute performance, but keep in mind that it's a competition between aircraft in those conditions on that day, so the headwind isn't a factor in the relative performance of the competitors, except to the extent it's varying at the time and small variations in wind speed are probably enough to give one plane a victory over others with more or less identical STOL performance.