Mario and SMG4 once again fight about who is better at swag, so with X being the host SMG4 and Mario go through a series of contests against each other to see who is really better at swag. At the end it was a tie so the people ask the viewers to decide who was better at swag by the amount of wins.
The scene where Mario holds the baby penguin over the cliff is an obvious nod to the famous scene from The Lion King.
It's still disputed who won.
SMG4 is heard screaming "CRUSH KILL DEST-....nah", this is a reference to a line from the Pony.MOV series, where the only thing a single character would say was "Crush, kill, destroy, swag!". The line has become an Internet meme.