Level 200 mentions that "Just how you remember, whatever you want, all the time. You're in control here. All we need is for you to remember." My interpretation is that Level 200 consist of an entity or number of entities that mimic the people and environment from a visitor's past. They do this, apparently, to keep the "rot" away, saying "The rot only grows when you're not around."
My guess is that the entity or entities in Level 200 are parasitic and they develop a symbiotic relationship with a visitors to level 200. They provide an imaginary fantasy world, made out of the visitors memories, for the visitor to live in, while the visitor provides them the energy or sustenance that they need (the rot may represent starvation)
