For those who don't know the difference, in the SMB3 system, the player when hit goes back to small Mario if he was Super Mario, dies if he was Small Mario (or Mini Mario as this system was also used in the NSMB series) and goes back to Super Mario if he was anything else (Fire Mario, Ice Mario, Raccoon Mario, etc.) apart from Starman Mario or Mega Mario.
In the SMB1 system (also used in SMW, and currently used in SMBX), the player when hit dies if he was Small Mario or Mini Mario, and goes back to Small Mario if he was Super Mario or anything else (Fire Mario and so on).
I've made sketches so that you can understand more easily:
As said above, SMBX currently uses the SMB1 system, which I think is bad, as it makes the games harder and I think most people are now used to the SMB3 system as it was used in every recent Mario games.