This is a very witty turnaround. Volunteers have themselves shrunk down to 1/8 regular size, and then are provided comfortable lives in a miniature city. The idea is to conserve resources, since little people use less of them. For psychological reasons, the little people are then segregated off from the rest of society, to promote a sense of normalcy.
Eventually the show’s heroes stumble on the city. They carefully try to avoid damaging the miniature buildings, but in an amusing bit, nonetheless panic the inhabitants with their regular, but comparatively monstrous, size. It’s pretty droll.
