Some of my assumptions about the use of scene graphs - if you perform actions on a parent node, the children should be effected relative to the scene graph tree. For example rotation, offset, scaling, z-order, etc. should be well behaved to keep the scene graph consistent.
In Rory's example, during runtime, I would expect to be able to rotate the elf by rotating the parent (torso) and the components (leg, arms, head) would rotate with respect to the parent so the 'elf' would stay connected (e.g. the children would not just rotate in place.) I think this may be 'obvious', but good to state. Similar for scaling the parent.
Right now it seems like the relationship between child and parent will be mostly x,y offset, is that correct? Are there other relationships possible (without going too crazy and trying to recreate Spriter / Spine style animation.)
This post is interesting to check out, a relationship they explore is rotation around a parent.
archive.gamedev.net/archive/reference/programming/features/scenegraph/index.html