The "Karma Bar" relates your use of this wiki to the total use of all wikis by the average wikidot user, across all the wikis this hosting service provides. So, no, your "karma" is not used to determine your wiki participation grade.
Why wiki participation is required is (1) otherwise people don't use it, even for the super-useful applications like sharing exam questions, workshopping "For Investigation" answers, etc.; (2) I always like to set up my classes so that there are some points that you can earn just by being social and participating—this helps provide a cushion for your grades because, um, yeah, as you may have heard, I'm a pretty tough grader, who writes really difficult exams, and who does not, ever curve; and (3) posting to a truly public website (which this is, btw; you don't have to be logged in to see content, as you do on Facebook or something, and all these pages are searchable using Google), and seeing how easy it is for new content to be created on the internet, helps improve your information literacy, by making you less credulous of every random bit of trivia you read on some random website.
So, there you go.