Aha, someone else has also been playing this!  I've been referring to this game in my last few status updates.
 
I've decided describing it as a shmup meets Inception is a pretty good overview of what the game feels like.  Probably put in about 4+ hours now.  I still want to play some more because I fell like there's still more depth to these mechanics and this structure for me to gain an understanding of.  I'm finding it a pretty fascinating experience and you're completely right about losing sight of what you're doing when you go 'down the rabbit hole' a few too many times and forget why you began doing that in the first place.  It kind of forces you to make sure you really need to change something before doing so because it might cost you a lot of time to do so and a bit of extra skill/time in the original level might be able to accomplish the same thing.  I've reached a maximum of level 25 so far but then plummeted down to 20 or so.
 
Have half a mind to write up a blog at some point with all the things I feel the mechanics are teaching.  I'd be intrigued to know if all these 'lessons' were fully intentioned by Mr Rohrer or if only some of them were and the rest just come about procedurally as it were.
 
Edit: I'm so glad this exists and was made.  It's such an interesting idea and there's not enough of those around.  I think I will be richer for playing it and that's not something you can often say.

What follows is some disorganized impressions of my time playing indie game Inside a Star-Filled Sky. If the name alone is enough to draw you in, read on. If you trust me enough that you think it’s worth you’re time to read through my ramblings, by all means. If promises of infinitely recursive two-dimensional shooters pique your interest, you’re in good company. And lastly, if you just want something to read, hopefully you’ve come to the right place.

Anyway, for those of you in the know, I’ll cut right to the chase: this is a Jason Rohrer game, so it’s very clearly not the kind of game you’d find on Xbox Live Arcade or Playstation Network. As a matter of fact, I can’t even decide if this is a game based on gameplay and mechanics, or if it’s some kind of incidentally interactive media that is supposed to convey a message directly into some part of my brain, but either way, I’ve enjoyed it.

That doesn’t necessarily mean that this is a good game though, at least, not in the way Halo and Crysis are. The almost-dual-stick shooter style controls aren’t entirely action-focused, and the game doesn’t really have an end objective. Instead, there are infinite amounts of levels that you can beat by finding an arrow square and touching it. The first time you try this, in fact, you’ll realize that each level is it’s own guy, and by beating a level, you become the next guy up. To reiterate, you are a guy within a guy within a guy, for as long as 32 bit integers can recurse. You are in Inception’s limbo, and this time, there isn’t a way out at all.

After you get your head around that, it hits you with something even more absurd: when you pick up power-ups, they affect your host, that is, the guy on the level above you, so when you go up a level, you gain the power-ups you obtained in the level before. But this doesn’t just apply to you. You can also go into enemies and change their power-ups to make each level a bit easier, or you can go into power-ups themselves and change what kind they are. You can even go into a power-up within a power-up within an enemy if you really want to.

But this leads to a couple problems. For starters, after an hour of playing, you might ask yourself why you are playing this ambitious crazy-person game. Without an end objective, or even a game over screen, the game begins to feel like an acid-tripped screensaver gone interactive. There’s no winning, no losing, not even anything in between. Just you going up, you going down, and you shooting or getting shot. It’s a good way to waste time, but it kind of keeps the game from being anything more than an ambitious distraction.

The other problem is distraction itself. Going into an enemy, then yourself, then a power-up and then another power-up and then into yourself again might make sense while you are doing it, but if you do it enough times, you’ll lose sight of what you’re doing. Like opening too many browser tabs while reading the news or Wikipedia, eventually you stop remembering or understanding why you opened half of them. Same goes with this game.