The time machine appears as a photo booth with a blender on top of it and a cuckoo clock with sausages attached to the back of it. On its side, there is a container of kelp soda connected to it. And as you see, it was a 25 cents photo booth.
The inside of the time machine is small with a bench and a slot where Karen can sit and power the time travel mechanisms; next to Karen is a camera that is still part of the time machine. There is also a slot where you insert a quarter to run the machine.
The time machine was built by SpongeBob and Plankton using different items from the restaurant Taco Haüs in order to get the Krabby Patty secret formula from the past to stop the apocalypse. The time machine first went 4 days into the future, which created an alternate timeline by accident. In this timeline, they saw the town had decayed into a desert wasteland and a bearded Patrick who is later revealed to be sitting on top of a buried Krusty Krab. Next, the time machine traveled 10,000 years into the distant future of the galaxy; where SpongeBob and Plankton found Bubbles the dolphin in his inter-dimensional spacecraft.
After escaping Bubbles, the Time Machine went to the right time and ended up at the Krusty Krab 2 days before the apocalypse where SpongeBob and Plankton took the formula and went back to present time in the Krusty Krab to deliver the Formula (only to find out he grabbed the wrong secret formula).
Later, Patrick uses the time machine and incidentally goes to prehistoric times and brings back Squidasaurus Rex who destroys the time machine when coming out.
The time machine is probably a reference to the Type TT 40 TARDIS from Doctor Who (which is bigger inside than outside, and that's probably the reason that makes Squidasaurus able to fit in the time machine).