The code is quite similar to a GPU shader function, and it's running on a "fantasy console" which basically gives you a 320x240 pixels framebuffer to poke into (and the code used to implement the fantasy console isn't counted).
Same reason why doing things like this on old home computers or a DOS PC can also be done in a few hundred bytes of bare metal code, because the hardware implements most of what today is called a "rendering engine" and implemented in software.
A non-specified amount of code in the MicroW8 runtime which isn’t included in that 256 bytes to implement the graphics layer (320x240 256 colors 60hz) and gives you 256 kib of memory.
256 bytes is the “cartridge” to run on this platform with compression.
It’s still extremely impressive because of the creativity of the generative visual effects they figured out how to fit in 256 bytes.
Same reason why doing things like this on old home computers or a DOS PC can also be done in a few hundred bytes of bare metal code, because the hardware implements most of what today is called a "rendering engine" and implemented in software.