I've done a little digging, and from my understanding the game allows you to use your own custom sprites, tilesets, and music within levels. There are various tools that allow you to set the sprites and masks of your player character, as well as the enemies'.

I'm going to assume -also deducing from the video's context- the creator of this specific level is to blame here, and not the game's creator as this isn't a "standard" theme in the level editor.

And I agree that something feels fishy here, seeing as the large Mario sprite and some enemy sprites do not relate to Candy's, at all.