It draws 8 squares around each existing square every iteration. Once one iteration finishes, another starts. Just sit back and watch. Each iteration is a slightly different color.
All code is mine, it definitely could be better, but I didn't use any references and I'm too lazy to optimize it. You can see a bunch of unused code from me trying to figure out how to do it before I finished this. The longest I've gotten it to is about 18% of the way through iteration 10 before Scratch crashed it. (that took a very long time)