If you're like me, then when you get to this level you spend 20 minutes swimming around in confusion before looking up all the steam guides and finally giving up and googling this level, since this style of gameplay was not described prior to this level. If so, this is the guide for you.

Step 1: Double click the glowing balls
Step 2: Wow.

But no, maneuver yourself around the octopus using up, down, left and right to position yourself above the lowest balls on the octo's legs. Double click them to have your guy dive down and hopefully manage to hit and eat them. If you successfully eat one of the orbs, the octopus will react and lose a chunk of his leg. You have to start at the tips and work your way up.

Go up the legs and chomp on all of them before eating his eyes, then finally rotate yourself over the holes near the top of his head and doubleclick in to dive in there. From there you can take him out normally by swimming around with your mouse or WASD again.

Hope this was helpful to the other confused players out there!