This is obviously a tribute to the old school game Pong.

The Pong Game can only be accessed after you have defeated Aducar in the Underworld Campaign, but before you export to another difficulty level.

It is located in Esotopia (Dryad Forest) at the following location:

At the end of the path shown above is an old style portal, that before beating Aducar will be closed. When you enter the portal you will be brought to a small area with three rooms:

The first room looks like a marketplace complete with a useable merchant, the second room looks like a tavern with some interesting paintings on the walls, the last room (marked by the X above) will be a life size Pong Game:

To play click on one of the clear blocks and use your mouse to literally run in back and forth, the opposite block will play on its own. The object of the game is to have the block in a position to have the glowing orb bounce off of it. Each time the orb hits the block that you are controlling you will gain a small amount of experience, starting with 100 experience points. If you are successful in lining the block up correctly multiple times in a row each hit will give you a bit more experience than the last. You can keep playing as long as you like and each time you miss a shot it will just restart the Pong Game so that you can continue playing it. As a note you want to be able to run as fast as possible in order to keep up with the orb, Battle Mages should use Cataract of Agility and all other character classes should use gear to improve their speed before playing this game.