They're reading the game's state from memory. This is also commonly done in tool assisted speedruns.

Was Mario like this? No random adversaries at all?

Yeah. Read all about it here:

https://tasvideos.org/GameResources/NES/SuperMarioBros

https://tasvideos.org/GameResources/CommonTricks#LuckManipul...

https://tasvideos.org/GameResources/CommonTricks#ExamineGame...

https://tasvideos.org/LuckManipulation