Headcanon: Donkey Kong (1981) and Mario Bros. (1983) take place in New Donk City. As mayor, Pauline held Donkey Kong captive in New Donk City Zoo. At some point, Donkey Kong broke out of captivity and turned the tables on Pauline. Mario, boyfriend of Pauline, saved the day. Sometime afterwards, Mario and Pauline had broken up and the sewers were infested by turtles, crabs, and flies. Mario and his brother Luigi, being plumbers, went to work clearing out the sewers, where they found that the creatures were coming from the Mushroom Kingdom. Then Super Mario Bros. 1 happened.
I don't know. I kinda like the real world theory, namely due to Spider-Man's New York. Also, it bring crossover ties to crossover with other Nintendo IP's like Punch-Out.
...Where would Wrecking Crew and Dr. Mario fit into this?