This level is unusual in a couple of ways. First, it autoscrolls from left to right, forcing the player to go forwards. Second, it focuses on the Mini-Mushroom, and is in fact the best place in the game to gather them. Third, it has two branching paths, which will be discussed separately.
As the level begins, hit the second ? block you see for a Mini Mushroom. This will give Mario the ability to jump higher and run on water for a period of time. Test it out on the pool ahead. Be careful though, as one hit will kill this miniature version of our hero.
There are two pipes that can be taken, the red one on the top and the yellow one below. Both are similar, but the red path is definitely harder, as it has more enemies and scrolls faster. That said, all of the star coins appear down this pipe, so you'll have to go in it sooner or later.
Yellow Pipe[edit]
Hit the gold brick on the other side for limited protection. It won't last long, but can save you against a hit early in the level in addition to granting up to 100 coins. Follow the trail of coins, walking on water and jumping over spiky obstacles. Eventually, you'll see a green mini-pipe above. Going in it will take you to a special area where you can bounce off of bullet bills to collect a bunch of coins. After falling down, you'll end up by the midpoint flag, and will be able to grab another mini mushroom.
Grab the gold brick on the other side again for more coins and protection. Jump from platform to platform over the spikes, grabbing red coins along the way if possible. Soon, a P switch will appear, which can replace the surrounding bricks with coins. Alternatively, you can leap onto and over these barriers, so long as you avoid hitting spikes or enemies. You will finally reach a pipe leading you to the flagpole.
Red Pipe[edit]
The Red Pipe's path is ultimately similar to the yellow pipe's, so an in depth discussion isn't needed. To grab the first star coin, bounce off the top of the first parakoopa you see and leap forward into the air to grab it. The second star coin is up the green pipe, where you can collect coins while bouncing on bullet bills. Hop on them until they reach the end of the area, and then jump onto the coin while falling back to the main level. The third star coin is in the second half of the level, and appears by a brick wall. You will need to jump off of the nearby bricks to grab it.
At the end of the level, the red pipe's path takes you to a better position to reach the top of the flagpole than the yellow pipe's.