As the game's introduction succinctly puts it, "The object is to dig holes and pound the apples through the holes." Using the keyboard, the player controls a character that walks left and right along platforms made of green brick, and climbs up and down ladders between them. The player can use a shovel to dig holes through the platforms, into which enemies will fall and become trapped. Once an enemy is stuck in a hole, the player must strike it repeatedly with the shovel until it falls through and hits the level below. This must be done quickly, because after about 17 seconds an enemy will be able to free itself, filling in the hole in the process. The player can also refill holes they've dug, or drop through them. The game is an example of the "trap-em-up" genre, which also includes games like Heiankyo Alien, Lode Runner, and Boomer's Adventure in ASMIK World.
Source: Wikipedia, "Apple Panic", available under the CC-BY-SA License.
Apple Panic is a direct translation of the arcade game Space Panic, which was released in 1980 by Universal.