The demo has brilliant pacing. When it starts with the sprites moving in a big circle, initially I'm not impressed at all, because C64 has 8 sprites per line, and changing the sprites to be drawn when the screen is halfway drawn is pretty much the first trick you learn. Then the sprites move to the top of the screen, where they are all on the same line together, and my jaw drops.
Plus, Linus did it in the border, where only sprites can be, so it can't be a trick with bitmap graphics or custom characters.