Dialogue system and the dithering looks great!
The circling mechanic has some potential but currently there isn’t much at stake with it. Maybe by talking “right” with some of the things, you could gain a form of ink that you could use to draw the circles, this would limit you how often you can deal with the baddies that way. Maybe some of them could be stunned with the right shape (if there was more than circles) so you could talk them out of hurting you and gain some ink and so on.
If you die while drawing your cursor mode seem to get stuck and can’t restart the game?
Either way, cool vibes!