Alright, so your fish are eating all that food, and their main excretory product is Ammonia (NH3). So it turns out NH3 is super toxic to most aquatic life. Luckily, we have bacteria. The bacteria that colonize our tanks and "filter" the water consist mainly of three types.
There are bacteria that generate energy through the conversion of ammonia (NH3) to Nitrite (NO2), much in the way we process glucose to water and carbon dioxide...electron transport chain and whatnot.
Another type of bacteria converts NO2 to nitrate (NO3) for energy. From there, either animals, plants, bacteria (the third type), coral or algae use nitrate for their biological process.
On to the next point...The bacteria stratify. Converting ammonia to nitrite requires oxygen. Converting nitrite to nitrate must be done under anoxic conditions. Not only do you need to have enough surface area for these bacteria to colonize, but it must be under the right conditions. Your sand bed maintains an oxygen rich area near the surface where there is good gas exchange due to current. Below that is an anoxic layer sealed off by the top layer. In rocks, the same thing is true only the anoxic areas are the holes within the porous rock, and the oxygen rich layer is exposed to the surface. All these metabolic products leech back into the water because everything moves down a concentration gradient.
I think what bill is saying is that most of your tank fosters the oxygen loving bacteria, including your filter sponges (nowhere on them is anoxic). The castles aren't porous, so again, they only serve to harbor oxygen-loving bacteria. His concern is that there is inadequate space for these organisms to colonize.
