The host does a terrible job. He's not printing the money. Woz is buying uncut sheets of legit $2 from the Mint and then having them perforated and bound. They are legal tender because they were printed by the Government.
He buys uncut sheets from the treasury, pays a printer to make them into pads and so on, and then sells them to random people at a loss just for the fun of playing with their minds :-)
"By law it's legal tender" - true because they're genuine "I get a printer [...] to make these pads" - they make them from genuine bills "I'm not sure if it's the right President" - white lie, it is "The serial numbers look suspicious" - yeah because they're sequential