This is one of the Learning Levels. On this level you will find Water, Movable Blocks, and Bugs.
You should not step into the Water; you will drown. However, if you push the Movable Blocks into the Water, they will turn to Dirt. You can then walk on the Dirt and it will turn into a Floor Square. Be sure to step on the Dirt before you try to push the second Block on it. You cannot push Movable Blocks over Dirt.
Do not touch the Bugs. However, you will find that you can move past them by waiting for the gap and moving to the top of the level before they come back. The other thing to notice about Bugs is that they always travel counter-clockwise around the central Wall. Once you have moved away from the central Wall, the Bugs will not chase after you, but, they will follow the contour of what ever Wall they happen to be following. You can think of Bugs as traveling with their left wing on the Wall and will follow the Wall as long as they can keep their left wing on the Wall.
Again, on this level, there are Chips to be picked up. The main puzzle of this level is to move the Movable Blocks into the Water to create a Walkway then get past the Bugs so you can pick up the Chips on this level and move to the Exit.