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The game is all a ploy to trick you into deleting the game so that Satan can go free
As theorized by Jesse Cox. Since you find out through hacking that Satan was possibly the Lost Soul all along, and Lost Soul is the one who encourages you to delete the game so that he can be freed.

Pony Island is a ROM hacked game, originally made by God for his children to play.
The game in its original form is now impossible to know, since his first son Lucifer has butchered it beyond all rhyme and reason. For argument's sake, we'll refer to the unaltered educational program as "SOUL". SOUL's purpose was simple: A test to see how many in God's creation love and/or place their faith and trust in them. YOU are the test for them. They get pass-marks needed to impress dad for ensuring your
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continued existence once the game ended. God's children passed it with varying levels of success. Michael and Gabriel could quite easily secure the love/salvation of hundreds to thousands of souls on their play-throughs. Jesus was perfect at it, he always had 100% completion, everyone got to Heaven, and Jesus always made his father proud.

Satan, his first-born, on the other hand, utterly failed at the game SOUL. He couldn't even win over a single soul. And this made him very bitter and hateful towards his father. He never once made him proud. None of us in SOUL wanted anything to do with him, and God couldn't take away our free-will since it violates the whole point of the test. Having sunk to his lowest point, in desperation, Lucifer hacks the game. He scripts everything to make us think we're trapped in a game... of the devil's own creation... called Pony Island.

Lucifer now can be himself while playing, who you'll view as antagonistic, but can also pretend to be your ally, an alias under the name "Hopeless Soul", an appropriate name, considering he was hopeless at playing God's game of SOUL. And it works. He secures your faith and trust, and you in turn ascend to a 'truer form of existence' once all is said and done. God is delighted, and immediately gives his children a sequel SOUL-2. Which Satan immediately hacks and rewrites into Pony Island 2: Panda Circus.

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This is why he pleads with you not to tell father if you discover what he's really doing. This is why he begs you to delete the ROM hack of SOUL (aka Pony Island). He doesn't want his all-powerful dad finding out he's a complete failure...

  • A bit of Fridge Logic behind this: When the Hopeless Soul speaks of the game's creator, he refers to the creator as "HE". Seems like he's just being dramatic about referring to Lucifer... until you realize that in the Bible, when God is referred to by pronouns (he/him/his), they are always capitalized.
  • Also, if Satan is a complete failure who can only win by cheating, then his choice of the name Hopeless Soul may be very telling of how much self-esteem he really has - namely, None At All.
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