From Knoppix 3.7, minirt24.gz, the linuxrc file, starting at line 611, showing how the symlinks are created.
Code:
# We need /bin/mount here for the -o size= option
/bin/mount -t tmpfs -o "size=${RAMSIZE}k" /ramdisk /ramdisk && mkdir -p /ramdisk
/home /ramdisk/var && ln -s /ramdisk/home /ramdisk/var /
echo "${BLUE}Done.${NORMAL}"
else
mkdir -p /home /var
fi

echo -n "${CRE}${BLUE}Creating directories and symlinks on ramdisk...${NORMAL}"
# Create common WRITABLE (empty) dirs
mkdir -p /var/run /var/backups /var/cache/apache /var/local /var/lock/news \
         /var/nis /var/preserve /var/state/misc /var/tmp /var/lib \
         /var/spool/cups/tmp /var/lib/samba /var/lib/nessus \
         /mnt/cdrom /mnt/floppy /mnt/hd /mnt/test \
         /home/knoppix /root /etc/sysconfig /etc/X11 /etc/cups /etc/dhcpc
chown knoppix.knoppix /home/knoppix
As for WHY the remaster links to /KNOPPIX, it is either in the linuxrc script or in the remastering scripts.
This is about as much I can help you.
James