The 2600 is streaming the data from the cartridge, including the program that is run on the 2600. We should remember that there's no frame buffer in the 2600, so there's considerable work done by the 2600 every frame - just as there is when its working with any other cartridge.

The 2600 kernel that runs on the 2600 is excellent but the encoding method is what makes a real difference here. Lodefmode did a great job with this. The use of playfield/background and player colour is exceedingly clever.