((Because if he doesn't fight, he'll be killed, and the guys are pretty much out to kill him, meanwhile he believes the wolf is just following his instincts and hopes that the wolf will just walk away.))
Edward wondered what the hell he did to that man and jumped back avoiding the swing. He then tried to get a hit in while the warlord was recovering from the momentum of the swing.
Vader's wife was very pregnant when she died 19 years ago. All of a sudden a 19 year old who is very strong in the force and has a distinct resembalance to him in his younger days rolls in from Vader's home planet with his old Master Obi-Wan (Who was the ONLY other person preset at the time his wife died. And to boot, the kid's last name is Skywalker.
So in answer to your question, he knew Luke was his son because his name is Darth Vader, and not Darth Retard.
-Forum post on why Vader knew Luke was his son.