Most forums do one of two things:
They either indent replies under the parent reply (like Reddit, or Digg), or they just put the replies at the bottom of the page (like DisBoards)
The first method can get crazy when you get several levels deep into a set of replies. How far do you indent replies in a reply chain? And if you ever have to stop at a certain point, how do you show a reply to a reply after that point?
The second method can get confusing sometimes, because might forget to quote the message theyre replying to.
What this forum tries do is combine the two methods. The reply only shows up in one spot at first - chronologically at the bottom. If you quoted the parent post, you'll notice two icons in the quote box. A down arrow, which shows you the entire conversation, and an up arrow, which will scroll you to the parent post. If you didnt quote the parent post in your reply, you'll see a "In Reply To" link in the top right of the post, which you can click on to show the conversation being replied to. The parent post (as your image shows) gets a box showing "X Replies". You can drop this down to see all the replies to a specific post.
In a 3 post topic, it might not make much sense. But in a 300 post thread, following specific conversations can be difficult, and I think this will provide a good way to do that.