Mr. Cat, the smartest character on the show, questions if Smileyland is really round. There are two possible reasons for this:
It's called Smileyland, not Smileyplanet, so he has reason to doubt if it even is a planet.
Smileyland runs on magic and is very different from the Earth in many ways, so it being flat is not exactly out of the question.
In this episode, Mr. Cat reveals that his father used to drink a lot, and later in the series, we find out that Mr. Cat himself is an alcoholic. Alcoholism is genetic - he probably inherited some genes which influenced that.
