It's a little bit complicated. You cannot patent a type of game. In other words, Nintendo does not own all platform or runner games, but if you make a game that is identical to another, then it is a copy.
You can make a game similar to Mario, and it's 100% legal, but you can't make a game identical to Mario because it would be an illegal copy.
You can't use Mario or use the Mario Bross graphics, because both are protected content, no matter how much you change the level design.
If you can design your own character, it can be inspired by Mario, but it shouldn't be the same. You can use similar graphics, but not the same or too similar.
That line is blurred, there is no exact value and it is difficult to define it in words, but if you make your own game, with your own graphics even if it looks a bit like Mario, it is your game and not Nintendo's and it would be 100% legal.
A fangame, even though it's illegal, it's very difficult for you to get into trouble, as I said before, some companies don't have a problem with fangames, but others do.
If you make a free mario fangame, 2 things can happen.
That Nintendo never notices your game or if they do notice that they don't bother to do anything.
The other thing that can happen is that they get annoyed and send a DMC to Itch to close your game or they send you a C&D card so that you can close the game yourself. It's not in trouble, they just "friendly" asked you to close the game.
Normally a lawsuit in court is something complex and expensive, and they don't do it for a free fangame.
If you want to make a fangame, you can, but you must be clear that it's not really your game.
If you make a fangame and nintendo comes to itch and requests that they shut it down, you have nothing to do, those are the risks of making a fangame, but that you are going to get in trouble with the police or a trial in court, it is something very , very, very unlikely.