I believe that perhaps in order for people not too familiarized with Geno to better understand the significance of his potential inclusion in Super Smash Bros. Ultimate is by bringing yet again the context of the Smash lore, what Geno (the doll) is, and some examples from real life.
First, examples from real life. Let's bring up everyone's (or at least most people's) favorite and iconic mouse; Mickey (yes, Disney's mascot). Started off as a cartoon character way back when, and in a child's mind, watching said cartoons for the first time leave them in awe and joy. The child then one day accompanies their parents say, to a general retail store, and when walking past the toy section, they spot that which they thought only existed behind the TV screen; Mickey. A Mickey Mouse TOY (or stuffed doll)! At that moment the child's eyes glimmer, and immediately turn to their parents asking them the obvious request, "I want that!". A similar scenario happens with countless other cartoons, animated series, and even movies.
Another example are video games themselves (although now more than back in the day). Now days you have some games launch with a "complete", or "collector's" edition bundle which at times include either the game's original soundtrack, a themed poster, and in some rare occasions, a figure of a main character from said game. Although most of these figures are sold separately but, die hard fans of video game series (i.e. Final Fantasy VII, The Legend of Zelda, Mega Man X, etc.) will buy said figures A.S.A.P.
With those two examples, let's bring up Geno (again, the doll). In Super Mario RPG, Geno at first is just another doll along with Gaz's Mario, Peach, and Bowser figures. Obviously, from the four Geno stood out the most (really, who IS this?!). Soon after its first appearance, it isn't until that magical, divine scene in which a star comes into Gaz's room, and after hopping over each of the dolls until it hovers over Geno, we witness the literal animation and transformation of the doll to life. The doll is given life; in every scene he's in we see his behavior, remarks, and role within SMRPG's story.
I won't go on about too much with the Smash Bros. lore since it's been touched upon previously on this thread, but basically since Smash 64, the fighters within the lore are all toys (remember the opening scene from the original Super Smash Bros.). These toys engage in epic battles in the world of imagination. In a way, within the imaginary world, the worlds from which each character comes from seems real (i.e. for Mario the Mushroom Kingdom; for Link it's Hyrule, and so on). Besides them engaging in epic battles in the world of imagination, the other part of the lore consists of said fighters hoping to one day reach the real world. This part of the lore is a great point of discussion because, in a way, all the fighters have already "reached" the real world. Albeit not in a literal aspect, but the way in which they have reached the real world can be seen through their games, their merchandise, and heck, even cosplays fans do of their favorite characters, movies (i.e. Sonic), and even the very same Smash tournaments. In fact, the world of imagination could be considered not simply the one we see within the games; but the one that was birthed from each character's creator/developer.
Following the topic of "reaching" the real world, Geno has already done so, but within the medium he originated in. Geno is a character that LITERALLY fulfilled the Smash Bros. lore way before Smash Bros. was even a thing. As Gaz played with his toys, Geno (again, the doll) would always embark on an incredible imaginary journey, and when Gaz asked Mario to play with him, Geno engaged in an "epic battle" (which as we all know, ended up with leaving "real-life-Mario" unconscious). However when the star messenger possesses Geno, he actually brings the doll to life, and within SMRPG, to the "real world".
Hot take: as it could be said that Sakurai was inspired by fighting games such as King of Fighters to make Super Smash Bros. as a game that would be more accessible; what if the lore of Smash Bros. was in part inspired by Super Mario RPG's Geno?