There are different levels of "made up" though.
Basically nothing from Captain Falcon's moveset in Smash comes from source material, because in F-Zero games he's always driving a car and there's little to take from those games to create a moveset in Smash. The only thing Captain Falcon uses from the source game is his Final Smash, with his famous Blue Falcon.
Because Duck Hunt dog does little in the original Duck Hunt game, Sakurai obviously had to give him moves he doesn't use in the original game to make him a viable fighter. However, contrary to Captain Falcon whose entire moveset was created from scratch, he still took inspiration from source material for his moveset, and looked at all the zapper games to take inspiration from, in order to diversify his moveset and make DHD represent the entire Zapper series rather than just his game. Neutral special (Hoogan's Alley), side special (Duck Hunt), down special (Wild Gunman) and Smashes (fourth wall NES Zapper shots) all take inspiration from the source material. Besides these, I admit all of his moves are completely made up.
Moves made up from scratch I think are okay as long as they show some creativity and put emphasis on the characte's characterization (like Captain Falcon being a flashy brawler with fire-boosted physical strength and Duck Hunt being a Tex Avery cartoon tag team). I think the best example of move being completely made from scratch instead of directly coming from the source game is Bowser Jr.'s up special: it doesn't come from any source game, but it puts emphasis on his Clown Car mechanic.