It is a room that stores science stuff, such as a machine that turns anything into ice cream and also a video game system where the player themselves can be transferred into the game and play like they are actually in it.
Role in episode
While walking down Atlantis with the group, Sandy finds this room and checks it out. The other characters also check it out, while SpongeBob and Patrick are interested in the ice cream machine. When Sandy, SpongeBob, Squidward, and Patrick visit the video game section of the room, SpongeBob accidentally clicks the button which sends him into the video game. All four of them end up in the game. The group, but mostly Sandy, tries to get through the levels of the game, which they succeed at.
After the game, SpongeBob, Patrick, and Squidward leave the room, but Sandy wants to stay for a while.