The balloons contain powerups. Most weapon can pop the balloons except for the Ray Gun. The Ray Gun blasts will simply ricochet off of the balloon. The best weapon for popping balloons is the Dart since that weapon will home in on the balloons.
This is probably the easiest level in the game. It takes a while to complete simply because there are many tasks to perform, but about the only way to actually get killed on this level is to accidentally fall off the edge of the scaffolding or through a trap door. So, just take your time and don't be too hasty when hopping across the clouds, and keep an eye out for the trap doors.
You cannot be hurt or killed while riding a bumper car, but the metal flooring that the cars ride on is electrified, so if Otto steps on it, he'll be electrocuted. To get into the bumper car you need to hop onto the strip of tires which separate the normal floor from the electric floor. Then just hop on top of the bumper car to enter it.
There is a force field blocking the exit to the bumper car area, and the way you deactivate it is to knock out the power poles which surround the bumper car arena. Each pole has a pink, undulating bumper at it's base. You need to ram this bumper at full speed to burst it. Then you need to ram the pole at full speed to knock it out. In other words, you have to ram each pole twice: once to burst the bumper and another time to deactivate the pole. You'll know that a pole is deactivated when the glowing light at the top goes dim. When all of the poles in the arena have been knocked out, the bumper cars will turn off, the floor will no longer be electrified, and the force field at the exit will be gone.
The cannon is used to blast Otto across the long abyss between the first and second area of this level. To enter and activate the cannon, simply jump on top of the barrel in front of the cannon and then walk to the cannon's opening. Press the Jump key to enter the cannon and the rest is automatic.
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