No, it's not exaggerated. It doesn't actually go so far as to call it a femur, but it does indeed keep track of the temperature of the left rear upper leg bone, as far as it is distinct from the temperature of the left rear upper leg's muscle, fat, skin or hair layers. After all, if the water buffalo were to stray into the path of a dragon's fiery breath, or a stream of molten lava, then it's vital that it be able to tell you whether the hair has burnt, the fat has melted, etc.
You can turn off temperature in the config file if it takes too much cpu time though, in which case everything just has an assumed temperature, with no heat flowing around to change it.
Pardon me while I pick my jaw off the floor. I had heard stories about the random instances of absolutely obsessive attention to detail when modeling the physics/chemistry of things in the game, but did not expect anything like that.
Out of curiosity, how do details about these things become known if the code is not open sourced? Is it in official documentation somewhere? Is there any sort of list of these ridiculous examples of awesomeness?
Through a combination of playing, reading bug explanations, and modding the game through the raw text files, which define everything from what types of organs a creature has to the different types of cheese that can be made from it's milk.
Since the learning curve is high, the best way to start understanding it is to first learn how to play. From there you can start tinkering with the available mechanics.
This aspect of it is fairly easy to observe from inside the game; the Health screen goes on for three pages of possible symptoms, diagnoses, treatments, etc. This is just an overview, arranged like a spreadsheet with a row for each dwarf (and their pets and livestock) and a column for each symptom and so on.
It also tracks nerves and blood flow in a generalized way; any strike which penetrates or cuts the tissue layers has a chance of damaging the nerves in that body part. Nerve damage may or may not heal with the rest of the wound, and that will cause chronic infirmity or paralysis. Blood loss can cause dizziness or loss of consciousness, etc.
The combat logs are quite thorough, and after your first combat (which includes hunting and sparring) you'll quickly see how each actor is choosing from a "menu" of possibilities that varies from moment to moment. If one combatant loses a hand, they won't be able to strike with it, and nobody else will be able to target it with an attack.
If you then play the Adventurer mode, which is part of the same game but played as an individual character's perspective, you can see those menus reified as actual menus for you to choose from. Some of them are generic: you can swing your sword with or without targeting a specific body part. Others are much more specific. If your weapon gets stuck inside your opponent, you have the option of twisting it to cause pain (and probably more nerve damage).
In one game I played I fought a megabeast which had some kind of contaminated blood. My dwarves won the fight, but tracked the blood all over my fortress. I had them cleaning it up, but couldn't keep on top of it; eventually it was everywhere. A while later I noticed that a significant fraction of my dwarves and animals had rotting wounds on their feet...
The development log (http://www.bay12games.com/dwarves/index.html) and the game data files (which are all just text) also supply a lot of information, but they're not required reading; all of these details are pretty visible in the game. This is one of the things that makes the game so rewarding. Even when you lose a fort you can figure out what happened, and you can figure out how to avoid it or solve it next time.
You can turn off temperature in the config file if it takes too much cpu time though, in which case everything just has an assumed temperature, with no heat flowing around to change it.