The Labyrinth Zone looks completely different in its various depictions. The tunnels that Arachbot dug are dark and featureless, eventually leading into a large chamber that can be flooded. Its later appearance would make it look more like a sunken city.
Sonic the Hedgehog first arrived in this Zone during his attempt to secure the Chaos Emeralds before Dr. Robotnik. Sonic would later return when Miles "Tails" Prower was kidnapped by Arachbot. Sonic chased the robot down to the Labyrinth Zone alongside his friends, eventually managing to save Tails and defeated the baddies.
Sonic and Tails soon returned to the Labyrinth Zone, where they encountered Badniks that attempted to kill them. Sonic escaped by diving underwater. Attempting to grab some bubbles for air, he ended up getting trapped in a plastic ball built by Dr. Robotnik. The bubble soon started to shrink around Sonic, with the hedgehog making his way back to the surface as it did. Upon coming out of the water, the Badniks, who had captured Tails, destroyed the plastic bubble around Sonic, setting him free and allowing the hedgehog to finish them off.