As you saw, for project 7 the test scripts set up all the pointers so that your generated code can be tested.
I project 8 you will add bootstrap code to the beginning of your generated code that initializes the SP and calls Sys.init().
The code that is generated for the 'call' VM command sets ARG and LOCAL. (You'll become intimately acquainted with stack frames in Project 8.)
THIS and THAT are set up as needed by the VM code generated by the compiler. THIS is set to point to the current object at the beginning of every object method. THAT is used for various memory accesses like array indexing.
--Mark