Wow ... doesn't she sound like Emily Barker!! Must be an Australian style
As for the picking pattern, it's just a slightly syncopated arpeggio ... assuming you've got the chord sequences sorted for the left hand ... she appears to pick - the first string with the 3rd finger, 2nd string second finger, third string first finger, then the thumb slightly off beat. That sequence is combined with a few three-finger chords (top three strings all plucked at the same time) followed by the thumb string. Sounds easy if you say it quickly, but there's a lot of careful timing in her playing which gives the interesting sound ... very nice
For the "how to figure out what she's doing" question ... for me, it's just practice. I spent several evenings a week for years around folk clubs and coffee bars in the late '60's and early '70's just watching and listening (and playing a bit). Initially, if possible, I'd position myself so's I had best view,, eventually I could get most of it just by being close enough to see most of the playing. That's not to say I ever got good enough to emulate a lot of the players I was watching, but at least I knew where I was going wrong
We didn't have YouTube tutorials in those days and sheet music was expensive, even if it was available, so most stuff was learnt "hand to mouth" with small groups of friends in back rooms and bedrooms ... good times