The term Spongi came about on the Space Mountain ride at Disneyland. Some OMB members were on the ride when it broke down. While the ride was stopped, the people were looking at the meteors and realized that they were just pieces of sponge. Somehow, that got transferred into Flying Spongi. Basically, how the song works is each verse is about a random member of the band.
People take turns making up verses about each other.
Additionally there is a chorus that everybody sings after each verse. The lyrics haven't really ever been written down, it's just one of those things you learn from being around other OMB members. It catches on pretty quickly, then it will be stuck in your head forever. Included in the job description of the Historian, is something that's been around for a long time, the collage. Originally collages were made and presented as gifts from the members of the band to the director, at the end of the season.