It's more of an idea for a later game Smash 5. The Yo-Kai Watch conversations as I would call them could be like this.
For Mario
Jibanyan: Who's this plumber guy?
Whisper: That's Mario the most recognizable video game character around, he's been around for years. Almost everyone knows who he is.
Nate: Seems pretty famous.
Whisper: Indeed but he's also very tough, fireballs, the Mario Tornado, his Fludd. Just the tip of the iceberg. He's a jack-of-all trades and a balanced lethal fighter don't underestimate him Jibanyan.
Jibanyan: Pfft I hate baths. But I'll take care of him. Time to clog the toilet with Mr. Plumber
Nate and Whisper: Yeah!!!
For Link
Jibanyan: There's an elf with a tunic here.
Nate: Wait isn't that.
Whisper: Yes Link is the hero of time he's been around on many adventures. He's actually a Hylian he has a lot of descendants. From many eras.
Jibanyan: Odd family reunion that's for sure.
Nate: He's got a lot of gear. Definitely equipped.
Whisper: Yes his master sword is the sword of evil's bane and the only weapon that can defeat his archnemesis Ganondorf. He's also got his shield and bombs, bows, and arrows. Link a forced to be reckoned with.
Jibanyan: Whatever I'll eliminate him with my Paws of Fury!
For Kirby
Jibanyan: Oh a pink poofball I wonder if it's as yummy as chocobars.
Whisper: Jibanyan wait that's not candy. That's Kirby the Dreamland protector. He can inhale opponents and use their abblities against them.
Jibanyan: What a copycat who does this guy think he is?
Nate: That's funny coming from you considering your a cat.
Jibanyan: Yeah so what?
Nate: Oh calm down just focus on your fight.
Whisper: Also atch out for his hammer and stone abblities among other things they pack a wallop.
Jibanyan: Let's go!
Some examples.
He could use fire attacks like the flame, claw swipes, and other fire and claw attacks. He could also inspirit and make an opponent tingly. His final smash Paws of Fury would've activated by a mini game just like the game! From drawing a line, or pointing at him it doesn't matter what controller your using it would work fine.
Komosan would actually make an opponent burn for a second, Walkappa would make them loaf around being lazy for a minute, and Blazion would make them motivated and increase their attacks damage. You could take advantage of this at the right moment. Do KO or do damage.
Springdale could be a stage and go around the Adam's house, Banter Bakery ECT. Yo-Kai like Happiere, Dismerelda, and Snootsolong could appear in the background.
Katie could also appear, with Bear and Eddie.
Katie could be a part of the conversations too.
And this could happen but most likely won't till maybe Smash 5. Mii Brawler costumes and a trophy for Jibanyan, and maybe Whisper, and Tattletell could work. As that's what they would do for now.