The photo was artificially lit, most likely with flash powder or magnesium ribbon. Those create incredible amounts of light - obnoxiously so, which is why they were replaced by safer flash bulbs and later on electronic flash in subsequent decades.
The light would have been more than enough to illuminate the people standing and posing for the photograph in that enclosed room.
I wonder how different things would have been if we were not able to capture the past 100-150 years so well on monochrome film. What a remarkable time to be alive, and to have been able to look back on the past using a mostly-reliable and truthful medium - now long since lost with the advent of digital imaging.
I am not sure if it was "bounced against a wall to soften" or not, I don't think that our experience about what an electric flash looks like with and without bounce will apply, the pyrotechnic flash won't look exactly the same. The pyrotechnic won't be such a point light source for a start. So I wouldn't leap to the conclusion that there has to be a deliberate bounce.
> through the 1920s, flash photography normally meant a professional photographer sprinkling powder into the trough of a T-shaped flash lamp, holding it aloft, then triggering a brief and (usually) harmless bit of pyrotechnics.