Space Paranoids is the world of programs in Kingdom Hearts
After Donald accidentally transports them in, Sora, Goofy, and Donald arrive in the digital world and are promptly arrested by Sark who escorts them to the Pit Cell, where Tron is being held prisoner by the MCP; this room also hosts the Moogle Shop. After explaining the situation, the party escapes the Cell, heading for the Canyon, where they play a mini-game to unlock the terminal access. Further along and to the right is the Dataspace, where the password for the computer can be inputted.
Later on, the group delves deeper into Space Paranoids; the exit on the highest level and to the left leads to the I/O Tower: Hallway. Heading right takes the group to the I/O Tower: Communications Room, while going left takes them to the Simulation Hanger, where the Solar Sailor Simulation can be accessed. The Simulation takes the party to the Central Computer Mesa, which is the area just before the MCP's headquarters, the Central Computer Core.
Sora wished to unlock Ansem's computer files to find any information they can on Ansem or Riku. Stitch fell into the scene (literally), causing Donald to heatedly pursue the alien by jumping on the keyboard. Unfortunately, this alerted the MCP, resulting in the party being "arrested" and transported into Space Paranoids.
When the gang landed on Space Paranoids, they appear to have digital armor replacing their normal attire. They meet Sark, who sends them to a cybernetic prison: the Pit Cell. Here, they find Tron locked up as well. They join forces, and escape. Tron tells the company about his plans to stop the MCP, and Sora tells him that they are 'Users' from the real world.
The gang venture to a city in Space Paranoids, where they confront a group of Heartless who are wrecking havoc with the system. After defeating them, Tron acquires a way to send the gang back to Hollow Bastion. Before they leave, he tells them that they need the DTD (Door to Darkness) to access the files. Sora learns the password (The Seven Princesses of Heart) and returns to Space Paranoids.
Before meeting Tron, Sora and co. are forced to play on Sark's Game Grid. After a few Light-cycling games, they manage to escape and meet up with Tron. The gang then go to the IO Tower, where the MCP has summoned the Hostile Program to derezz (delete) Tron and Sora. They fight the program and defeat it.
Sora, Donald, Goofy, and Tron unlocked the files, but learned that the data files have become corrupt. Space Paranoids, though, would be at peace for a while.
Like a somebody Second visit
Part 2, when the Battle Level is 42, shows the MCP tampering with the defence systems of the town, and releasing dangerous Space Paranoids Heartless into Hollow Bastion. Leon says that Cid is working on a system to derezz the MCP for good. Sora must enter the computer and obtain when it is ready.
Sora enters the computer and meets up with Tron on the Game Grid. An army of Heartless is attacking the system. They fight off what Heartless they can and then flee to the I/O Tower, where the data to derezz the MCP is awaiting them. After saving it into Tron's data-disk, they go to the Solar Sailor. They take the solar sailor to the Central Computer Core, where they fight and derezz both Sark and the MCP. Thus, ending the story of Space Paranoids.
In Space Paranoids, Sora, Donald, and Goofy, are converted into data and hence change forms accordingly. When Sora changes into his Drive Forms, the circuit patterns on his outfit alter color to match accordingly; they will change to red for Valor Form, blue for Wisdom Form, yellow for Master Form, white for Final Form, black/purple for Anti Form, and the circuits follow the colors of the Kingdom Hearts outfit for Limit Form - silver torso, red pants and yellow shoes.
A Light Cycle mini-game is unlocked after Sora completes it for the first time.