8 bit micros of the era are much more dependent on their graphics hardware, what makes this demo impressive is that the c64 had a much more limited graphics chip than the NES (fewer sprites, fewer colors, and no support for tile based scrolling)
Pretty every scrolling game on the C64 uses the character mode as "tiles". It may well have been more limited than the NES - I have no idea what the NES hardware was like, but it reduced the amount of copying enough that it was rarely a major problem. The low number of hardware sprites usable per raster line was sometimes a limitation, but not very often - people got around it by using characters and/or careful level design.
While this is cool, I'm surprised people find this impressive - it's nothing special for C64 games. E.g. compare the Mario clone Giana Sisters (1987):
https://www.youtube.com/watch?v=8teXm6723-g
To a more technically impressive C64 scrolling game like R-Type:
https://www.youtube.com/watch?v=Bft5BhWIzTU
Or Shadow of the Beast (though a shadow - sorry - of the Amiga version) with its many parallax layers:
https://www.youtube.com/watch?v=R_GdJiEjSho
Both have heavy use of a mix of raster interrupts to scroll independent parts of the screen separately, and sprites, coupled with updating the bitmap of some custom characters.
He made a C64 game called Katakis that was so similar to the R-Type arcade game, Activision blocked its release & threatened him with a lawsuit [1] - unless he accepted a contract to make Amiga & C64 Versions of R-Type.
(He also made Turrican. The guy was a genius. His C64 games are one of the things that inspired me to become a programmer.)
Some amazing C64 games are being produced in recent years, for example see this one > "Sams Amazing Journey" https://www.youtube.com/watch?v=1uHys7Vr-FY
To the initiated this port is impressive because of the level of polish; attention to detail and quality of the gameplay matching the original.
Anybody can carve wood but only a great artist can do it very well.
This is a game not a tech demo. The Shadow of the Beast was a demo even on the Amiga.
Where we agree is R-Type. Superb.
I get that this is a port, and that they've more concerned with matching the original as closely as possible and less with optimizing for the C64, and that's of course a valid choice, and praising them for matching the original is not something I take issue with.
I'm just surprised that people find it impressive.
To me, looking at it, I wasn't impressed because I remember the games I played at the time, and it just doesn't compare all that favorably.