This, like Defender, is an original Atari game now rewritten for the Vic 20.
In Centipede, you are in a forest of mushrooms and you have to destroy the centipede before it can reach you; it's not as easy as that may seem.
The centipede zig-zags down the screen toward you, bouncing off the mushrooms. You have a bug-blaster (just happens to look like an upside-down mushroom) that is able to move up, down, left and right. Shooting mushrooms gives you a clearer shot at the centipede, but each segment of the centipede that get hit turns into a mushroom - which sometimes results in the untimely change in direction of the rest of the centipede, so be careful when it's just above you.
There are other dangers in the forest - spiders which bounce around the screen eating mushrooms and your bug blaster; the scorpion which scurries across the screen poisoning the mushrooms (And when the centipede touches a poison mushroom it goes insane and makes a frenzied dash for the bottom of the screen); and the flea. Not as spectacular as the other two: he just drifts to the bottom of the screen, leaving a trail of mushrooms behind him. To destroy it you must shoot him more than once or he can destroy tour bug blasters.
All round, Centipede is a good one or two player game with well-defined graphics and good clear sound. Atari's cartridge based software for the Vic is a good idea and I am sure it will take off.