Yes the distance between the cameras is your IPD.
The above method aims to simulate the position of your eyes when you turn your head - keeping a constant IPD no matter which way you look to give the stereo effect. The pivot point of rotation is where your neck would be. If you look at the camera settings in the above print screen, you can see that each camera has just 1 Deg FOV in the horizontal, and 180 Deg in the verticle. So to make a full 360 stereo image, you need to render 360 strips (well 359 actually) for each camera/eye, then stitch all the strips together to create the side-by-side image that can be viewed by the rift.
Theres lots of info here:
https://forums.oculus.com/viewtopic.php?f=33&t=4613