This level is a reference to the obscure, yet official game called Sonic J. It was part of the many games that were supposed to be released for Motorola phones when SEGA collaborated with the company many years ago. Yes, it's supposed to look like that. Yes, the level design is supposed to be blocky. You can look it up for more info.

This stage will be the final level of the New Physics Demo after you've played all the other stages.