Mario and Luigi's heroic actions in saving the princess have cost them their lives during one adventure, and sadly they had died in a battle with Bowser. Their bodies were buried outside the Mushroom Kingdom, which was left terrified at what the Koopas could do now that their heroes had passed.
Miraculously, Bowser was killed in one of his own searches for power soon after, dying after falling into a volcano. The Koopa Kingdom was left without a leader as Bowser's eight children continuously fought over who would become the new king, and it gradually fell into anarchy as the years passed.
In the Mushroom Kingdom, Peach continued to rule as she had done before, now without the threat of being kidnapped. Unfortunately, a new threat emerged in the next five years - Toad hunting. When it was discovered that the Toad caps possessed a large amount of raw energy and power, Toads quickly began to be hunted after.
Toad Town was reduced to simply a human population years later as many were killed by hunters, and the remaining Toads had fled to distant areas on the Mushroom Kingdom where they hoped to be safe. It's a dark time, especially for Toad, who escaped with Toadette. The two must fend for themselves in this story.