This level affects the course of the rest of the game and even which endings you can get, so pay attention!
This is an autoscrolling level. Strangely, you have to fall pretty far off the left edge of the screen for it to kill you. There are two exits you can reach: the one above-ground and the one in the moat. The moat is safe, but it's very easy to fall in and you can't get back out, so if you fall in, you must either take the moat exit or die. Since you have infinite lives, there's no problem with simply suiciding with the autoscroll and trying again if you fall in and you want to try the above-ground route.