This short is a sequence featuring Mario warping around Super Mario 64 maps to the rhythm of the Mii Channel music.
The video begins with Mario warping around the grounds of Princess Peach's Castle to the beat of the Mii Channel music. He enters the castle and begins to flit around Toad; the latter tells him to go away. Mario visits Bob-Omb Battlefield and overthrows King Bob-omb, then returns to the castle to continue annoying Toad. Mario begins teleporting to Bowser in the Dark World and begins spinning Bowser by the tail, still roughly to the beat of the melody. He is about to throw Bowser when the latter damages him, screwing up the sequence and stopping the music. Lakitu states that the video will need to be re-recorded because of this, much to Mario's frustration.
The video should not need to be re-recorded from the beginning because:
Someone can edit the video using SMG4's computer and video-editing software.
There must have been cuts in the recording: Mario is the only one teleporting, as far as we can tell. Lakitu does not warp along with Mario, meaning that he is not recording between scenes. Therefore, he must have recorded several different, successful shots of the rest of the video.
Because of this, Mario should at most have to redo the Bowser battle scene, and nothing else.
…or maybe Lakitu was just trying to screw with Mario. Or maybe Lakitu's just an idiot. Or maybe SMG4 just really wasn't thinking through his Kafka Komedy this time. Your guess is as good as ours.