You heard it right. Spongebob is actually filmed through a crystal ball and exists in an alternate universe where the laws of physics are a bit different. The makers of the show found an alternate universe at a seance and were so fascinated by it that they decided to film it as a documentary. After filming several episodes they decided that no one ever watches documentaries so they should just make it look like a cartoon show instead. While the actor who plays the pirate is actually one of us, the visits to Bikini Bottom are all documentary footage of the alternate universe and yes squirrels can actually live at the bottom of the ocean there despite the head crushing pressure that humans would face.
The inhabitants of this alternate reality actually do speak English so the show's creators were able to understand everything they say.
Why does Mister Krabs have a whale for a daughter? Turns out he adopted her to get a welfare check from the Bikini Bottom Department of Marine Affairs.
Why did Sandy Cheeks move to Bikini Bottom? In reality, she left Texas to escape a stalker who likes to rape squirrels and chickens. She went into the witness protection program and they figured he would never find her in Bikini Bottom.
Is Patrick really that dumb? Yes. Yes he is.
Why do the fish drown at the beach and how does it rain underwater? There are still things about this alternate universe we do not quite get.
Why are the fish so humanish? In their reality nuclear radiation altered the fish in that area and changed them from regular aquatic life in other areas of the world. The residents were warned by King Neptune never to go into the forbidden zone where they would be eaten by sharks and die.
Where is Bikini Bottom located in the alternate universe?
Bikini Bottom is located in the Pacific Ocean at the bottom of the sea, below its signature island, Bikini Atoll, a part of the Marshall Islands in the alternate reality they have labelled Bikini Bottom Land for scientific reference.