Theory: Paper Mario is Canon to Mainline

Paper Mario games are canon and also happen in the world of mainline Mario games but we see them from the perspective of the Paper World.

Abstract
All Paper Mario games depict events, locations and characters that exist in both a “Real World” and a “Paper World”. The stories are depicted through the “Paper World” and everything still happens in the “Real World” without the “paper aesthetics”.

Chapter 1: Same Universe
All Paper Mario Games happen in the same universe
 * Paper Mario: The Thousand-Year Door references the events of Paper Mario 64 multiple times and is a pretty direct sequel to it.

Chapter 2: Paper Stuff in Real Life
As chapter 1 shows, all games are part of the same canon, and all games involve some form of “arts & crafts” mechanic, such as paper folding, stickers, paint, etc. This chapter shows how these mechanics can still exist in the real world.
 * 1. Real World characters can be turned into paper, cut, folded or molded without major consequences


 * 2. Stickers

Stickers are not natural to the Mushroom Kingdom. Stickers come from the Sticker Star, and rain down over the Decalburg region once a year when the Sticker Comet arrives.


 * 3. Paint

The Paint found in Paper Mario: Color Splash is not your everyday Paint. Paint is consistently described as a life force throughout Paper Mario: Color Splash:
 * “You know... paint! That colourful stuff coursing through our bodies?”
 * “The paint you just absorbed is basically my blood, sweat and tears.”
 * “Paint adds beauty and life to the world.”
 * “Where exactly are we supposed to find this magical, life-giving paint you speak of?”
 * “I did basically sacrifice my lifeblood to get you out of that pickle back there...”
 * “They’re sucking the very life out of this beautiful island!”

It is also not something that’s exclusive to the Paper Mario World. As theorised in Seán D. Walsh’s High Consensus Theory on Goo, Paint appears as a sort of “life force” in various games that take place in the real world, such as Super Mario Sunshine & Luigi’s Mansion. When real objects (things) are wrung out in Paper Mario: Color Splash, they too produce paint, proving that paint is not a substance exclusive to the Paper World.


 * 4. Battle Cards

Battle Cards are the main battle mechanic that’s used throughout Paper Mario: Color Splash. While the cards may seem like a somewhat papery inclusion, Battle Cards also appeared in the real world in Mario & Luigi: Paper Jam.

Chapter 3: Continuity
Chapter 1 proves that all Paper Mario games share the same canon. Chapter 2 proves that no major paper mechanics would “break” real world canon. All that is left is to prove that both canons share the same world/stories:
 * Mario & Luigi: Paper Jam shows that both Paper characters and real characters have lived almost identical lives, with shared experiences.