The core implementation of grabbing is in the CameraHandInput component. This component implements methods IsGripping and IsPinching to detect a variety of grab poses.
The rest of the implementation can be seen in HandsCharacterHandState in the "Grabbing", "Final attachment" and "Pose" sections of its event graph.
While an object is grabbed, the hand pose must be overridden in order for the hand to stay wrapped around the object in a sensible way. To accomplish this, you must provide the component with a "Bone Map" so that it can apply poses to the hand mesh.
For an actor to be grabbable, it must be a child of the Interactable actor class. Within that class, you can set its grab pose properties with hand pose strings. For an example of this, look at the InteractableBrick class in the Hand Gameplay Showcase.
In addition, the hand skeleton is also stabilized and smoothed by the CameraHandInput component. You can tweak its settings (or disable the filtering completely) through its properties:
