that’s just because its in continuous time. For example; if the rate at node one (lower) is 5% and the standard deviation of interest rates is .005 then the rate at node one (upper) is 5 * e^(2)(.005). If you are going from an upper node to a lower node then just toss a minus sign in front of the exponent term.
@ensenmason each adjacent rate at each node is actually 2 stand dev apart but that besides the point. You will not need to build an interest rate tree on the exam. If you know how to calculate the bonds PV with the tree then you’re in good shape. If you want to build the tree then focus on that the second week in June.