They're actors. In Mario Brothers 3 you can see the background bolted to the set and you go back stage at the end of every level. It's a production. Then they do celebrity sporting events.
They've said as such at Nintendo. All the characters are actors, coworkers. If it's Tennis Day, they're playing tennis against each other. If it's Smash Brothers day, they're launching each other off floating platforms. Etc.
My head canon is that the games where Bowser is the bad guy are just them playing roles and the sports games are their real selves. Rivals, not really enemies. Mario Kart World having all the mooks join in on the karting supports this idea.
not sure that's hugely better frankly, because now it's implied that the mooks are just there to let the important people act out decadent fantasies in absurd detail
like being an extra in a mr beast episode whose sole job is to get punched into cold water
If I was a police officer, and after surviving an accidental catastrophic zombie outbreak in Raccoon City, my government said "Hey you're really good at that, want to do it 5 more times?" I'd simply pivot to being a construction worker or something.
"Mario. You can't a do this! He's a the one who keeps kidnapping peach!" Said Luigi. "No" Mario responded. "That's a why we do do this". Mario then narrowed his gaze and gripped the steering wheel of his cart, his gloved hands making the sound of a tightening rope. "Today, brother. We humiliate him. Tomorrow, we take a him down for good".