Camera
Open the Camera menu on the recorder bar and pick a camera. Built-in, external and Continuity Camera iPhones are listed. While you record, a small preview of yourself floats at the bottom right of the screen. Drag it anywhere. It isn't part of the screen recording.
Your camera is recorded to its own file, so in the editor you can change its size, shape and position, or switch layouts, at any time. See Camera settings.
Microphone
Open the Microphone menu and pick a microphone. Level bars on the bar show that it can hear you.
The preview card above the bar says Hearing you when your voice is coming through, and Say something when it's quiet.
Unplugging
If a camera or microphone you chose is unplugged, Screen Motion switches to another one that is connected and says so above the bar. When you plug yours back in, it goes back to it.
A recording never stops for this. If there is no other camera, the recording goes on and holds the camera's last picture; if there is no other microphone, it goes on without your voice. Either one picks up again as soon as a device is connected.