Agreed. One thing that I didn't realize when I first saw it was that the demo is able to render so many sprites because it's doing the simplest possible thing

Agreed. One thing that I didn't realize when I first saw it was that the demo is able to render so many sprites because it's doing the simplest possible thing - rendering just a few textures. If you render a bunch of different sprites with different textures, you'll get a big FPS hit.