That's how much RAM there was. That's 128 bytes. The entire in-memory program state was one eighth of a kilobyte. Then imagine everything else was limited like this. It's hard to understand how challenging it was to get a coherent game out of this thing.
Someone who was really inspired by "Racing the Beam" to try 2600 programming recently was Xbox daddy Ed Fries. Here's him talking about what he made:
Yes, it's a loving rendition of Halo on the 2600 platform! You can even play it now online: