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TLDR; You can skip this one. It's a sub-plot with world building. One reveal that can be found elsewhere too.

Long answer: Is this game part of 12M1S? Yes and no. 

I had always wanted to make a looter shooter RPG game, so I made one for my friend's birthday. It ended up taking way longer then I expected and quickly became my largest project to date (about 850mb uncompressed). After I finished it, I modified it some to fit it into the 12M1S canon. It's more of a sub-plot that helps to flesh out the world more. 

However, if you are looking for the main piece of connecting story, there is an NPC in Popo-City named Dr. Hull that gives a side quest that will clarify everything important you need to know from this game. Once you reach the open-world part of the game just keep going South until you find Popo-city. I can reach it within 20 minutes.

If I have time I might turn that section into a separate stand-alone game for people like you attempting to piece the story together.

The 'reveal' for the 12M1S can be figured out elsewhere but is explicitly shown in this game. Most of the post-challenge canon games add world-building and are setting something up for the future. In terms of the main story behind 12M1S they not critical.

If you have any more questions, feel free to let me know!