The narrator tells a story about an artist in a boat, drawing, then his pencil drops in the sea and he starts crying. The French Narrator then tells us that the rule of the artist at sea number one: Always bring a spare pencil. SpongeBob and Patrick are playing "Rock, Paper, Scissors" using bubbles, when the pencil lands in between them. SpongeBob and Patrick then realize that whatever they draw with the pencil comes to life, thus naming it the "Magic Pencil."
SpongeBob then draws "DoodleBob," a sketch version of himself intended to fool Squidward. However, DoodleBob begins beating Squidward up, steals the magic pencil, and wreaks havoc (such as trapping SpongeBob and Patrick in a hole, hitting Patrick with a wrench drawn from sand, a bowling ball made of a rock, and a regular rock.) until SpongeBob erases him (the eraser end of the pencil is capable of erasing anything, not just drawings).
However, an arm remains, and in the night it steals the pencil from SpongeBob and draws itself back. DoodleBob wakes up SpongeBob and attempts to erase him, and during the struggle the pencil is snapped in half (DoodleBob has the eraser and SpongeBob has the point). DoodleBob sharpens his half, so he has an eraser and a point, and the two begin dueling until SpongeBob accidentally throws his pencil out the window hitting Squidward in the process. DoodleBob corners him in front of a bookshelf, but steps on a piece of paper, sealing his leg onto the paper.
SpongeBob closes DoodleBob in a book, in which he is finally happy. The page with Doodlebob is framed on a wall. Then, Patrick came to SpongeBob's house and asked why DoodleBob was on a piece of paper. SpongeBob tells him why. Then, it goes back to the boat with the artist curled up in a ball and crying - the pencil is propelled back to the artist who grabs it and continues drawing, but when he touches his canvas, the lead snaps. Another rule of the artist at sea: Always bring a pencil sharpener.
This episode is number 8 on Tom Kenny's Top 20 on iTunes. His description says:
As a legacy of this episode, quotes from Patrick whenever DoodleBob hits him with another doodle, 'Where's the leak, ma'am?" (hit in the head with a wrench), and "FINLAND!" (knocked down twice by a bowling ball) are popular on the internet.
The pencil shown in the live-action version is longer but the animated version is shorter. This is to make SpongeBob and Patrick easier to handle the pencil.
In Indonesia, the scene where SpongeBob work together against DoodleBob from found his lair until erase it's whole body until only one of his hand left was cut. This was likely due to time constraints like some other episodes that also aired in Indonesia due to airing along with ads. However, it was possibly cut due to being too brutal to shown.
SpongeBob telling DoodleBob that he brought him into this world and can take him out is a reference to a line from The Cosby Show: "You know, I brought you in this world, and I can take you out."
Since the pencil is made out of wood, it shouldn't have sunk to the bottom of the sea.
The DoodleBob has three fingers at first, but when his hand enters SpongeBob's bedroom and takes the pencil, he has four fingers instead of three. After he redraws himself, he has three fingers again.
When SpongeBob tapes the pencil together, the two halves fit perfectly even though one half is sharpened.
SpongeBob is wearing his regular clothes in bed, while in other episodes, he wears his underwear or pyjamas to bed.
At the start of the episode, the artist is seen making many strokes on the canvas. But when he gets his pencil back at the end of the episode, the canvas is blank. It's possible that he replaced the canvas while SpongeBob had the pencil.
When SpongeBob breaks the pencil, it is snapped in half, but after DoodleBob points SpongeBob with it after SpongeBob accidentally throws his half, the pencil was its regular length.
During the part where SpongeBob and Patrick are watching DoodleBob, SpongeBob's belt is missing. After Patrick says "the stupid tie!," and SpongeBob clears his throat, Patrick says, "Oh, but it looks good on you SpongeBob.," and then SpongeBob and Patrick both gasp when they see what DoodleBob is doing. As they gasp, look closely. You'll notice that SpongeBob's belt appears for a second and then disappears again.
When SpongeBob looks at the book, he says, "Paper!" However, if you look closely, his lips don't move at all when he says it. It is possible that SpongeBob was just thinking the word "paper" instead of saying it.
While the pencil was falling towards Bikini Bottom, SpongeBob and Patrick were playing Rock-Paper-Scissors with bubbles. However, when the pencil crashes into the sea floor, the bubble blowers and bubble fluid are gone.