It sounds like they are going to sedate you and use a local or spinal anesthetic on your knee. I had a procedure done a couple years ago and I was sedated with something they called "MAC." It was a lighter version of general anesthesia. It was the best sleep I've had in years.

I fell asleep with a smile on my face and woke up still smiling. I felt great all day afterward. It was a combination of Fentanyl, Valium (or similar), and a barbiturate. Whenever I've been "sedated" I've been out like a light, but maybe that's just me. They also gave me Sofran for nausea, because I talked with the anesthesiologist before and told him about the RLS. Although with Fentanyl as one of the sedating meds, I'm not sure anything would have bothered my legs anyway.
A knee replacement is a bit more of an ordeal than the procedure I went through, but you'll get through it. I understand that it's a bit of work afterward to get moving, but that the pain is so much less right away. My bil had a knee replacement and got a MRSA infection, but was treated and is fine. Just remember that even MRSA can be treated easily, as long as you don't take antibiotics before they culture the infection and know for sure what it is.
You'll be fine and you'll be up and about in no time.