Turns out, Piccolo isn't all that powerful after all, at least according to Dragon Ball Z: Kakarot canon, and people are not happy about it.
According to the in-game encyclopedia, "Similar to how Master Roshi destroyed the moon when Goku transformed, Piccolo destroys the moon when Gohan transforms - or so it seems. In truth, Piccolo creates an illusion in which the moon only appears to be destroyed." This has caused widespread confusion, because people can't seem to figure out the reason for a retcon like this.
In the eighth episode of the first season of Dragon Ball Z, Piccolo is forced to destroy the moon in order to prevent Gohan from turning into a Great Ape during a full moon, as the latter's rampage had destroyed Earth. However, this was not the first time that the moon was destroyed: Master Roshi had done that once before, but it was restored - in Dragon Ball, Goku mentions that Kami removed his tail so that the moon could be fixed. But this act of destruction had put Piccolo up there as one of the most powerful characters of the entire series, and with it having been only an illusion, his positioning is now a little unclear.
This definition in the game's so-called Z-Encyclopedia is most certainly a retcon, as it is not in line with what was previously known about the event. For example, Vegeta needed to use a fireball to fight Goku even before his tail was cut off by Yajirobe. On the other hand, Goku's Space pod projected the image of a moon at one point, which made Gohan transform again, and this pod was also destroyed by Piccolo - explicitly stated that this was an illusion. So why the sudden change?
Apparently, this will remain unclear for a while now, as it is quite possible that there was no deeper reason for the change. This is, of course, the less-readily accepted possibility, at least where fans are concerned, because why change it at all? One of the most cited possibilities on the internet is that Akira Toriyama, the artist behind Dragon Ball, had actually forgotten what happened and retconned himself. Others claim that the game is simply not canon and that everything in there should be taken with a grain of salt.
Canon or not, the Easter egg is bound to be a topic for debate in the community in the days to come, but until the team comes forward to explain themselves, there's no guessing the correct answer. In the meantime, all we can do is accept the new state of the matter and wonder if the moon will ever be able to catch a break.