Help me understand what's going on with the reset circuit in this simulation.

The basic way how to discuss electronics is with a schematics (pictures), simulation results (pictures, numbers), placed here in this post within this discussion. You can easily refer to components, voltages, currents etc then.
You can hardly discuss an animation somewhere out of this thread. People who understand electronics do not need to mess with animated java stuff somewhere in the cloud in order to help you. They need to see a concrete schematics you are referring to (a picture) and simulation results (a picture) when necessary. And they may help you then.