The playset looks exactly like SpongeBob's House, except for the size difference. It is unknown if it is made of metal, wood, or plastic, but it is most likely made of plastic.
Role in the episode
After playing with the Krusty Krab Playset only triggers his memory of the Krusty Krab itself, SpongeBob takes Toy SpongeBob home (which is no other than this playset) and reenacts the scene earlier in the episode where SpongeBob is bummed out on his vacation with the action figure. He shortly makes him play with the Mini Krusty Krab Playset, but then discontinues the roleplay after Gary tells SpongeBob that it's not healthy to think about his job like that.