I always had an idea of there being a limited amount of rooms, and the Smashers had to share them. Currently, any Smasher not playable is living in a giant dormitory with the Assists and Poke Ball Pokemon until they're needed again.
There's 4 to a floor (everyone sleeps in different rooms), and they all train with each other. Currently, the genderswaps (Villager, WFT, Robin) are different people, but have decided to make it easier by living with the Assists as well. While it seems crowded, nobody minds and a lot of new friends are made.
Teams were randomly selected by Master Hand, by writing out all characters by chronological appearance in the tournament, and then counting off. These teams will occasionally challenge each other to find out who's the best. (BTW, Dr. Mario and ZSS are alt. realities, and Sheik is OoT Zelda)
Team 1:
With Mario appointed as team leader, this team is regarded as a dangerous group. While Zelda is mainly focused on training for combat and practicing her magic, Robin has his head in literature and Ike is quiet but fierce. Ike and Robin, happy to share a room, are bromancing it up, while Mario gets a migraine from their partying, and Zelda attempts to hide herself from the others.
Team 2:
Highly regarded as one of the strongest teams. Link and Sheik hit it off as per usual, and train together in order to show their power. Shulk, while normally active with Link in training, likes to spend time talking with Meta Knight, and helping him repair the Halberd from the Subspace incident. Due to the 3 swordsmen, a lot of training is centering around new sword techniques, while Sheik will train them in other areas, such as their physical attacks.
Team 3:
Everyone on the team was disappointed to see Wario join them, and try to stay clear of him. Falco's big mouth usually leads to him having to work with Wario, much to his chagrin. Samus and Lucina work together to become better fighters, and slowly became great friends. Meanwhile, Wario convinced Falco to join him in spying on the two ladies in hopes of some possible action. It never works, and Falco is usually blamed.
Team 4:
Dark Pit despises his team. He tries to stay clear of them and hopes to find somebody worthy of his time. However, when forced to fight them, he gets his butt served and eventually grows to tolerate them. Kirby and Do are extreme opposites, with Kirby preparing giant meals for Doc and Pitoo, and Doc lecturing on the importance of eating healthy. This leads to Doc and Kirby dueling often. Meanwhile, R.O.B. longs to be human in a corner, trying to painfully erase memories of his dead race. Doc wants to help, but R.O.B. cannot communicate with him. Shulk is planning on fixing that.
Team 5:
While Pikachu is considered leader, Ganondorf takes charge quickly. He plans on teaching them the ways of a champion, to create an army hopefully strong enough to beat the Hero of Legend. While Bowser Junior follows his every command, he's by no means a champion, and is a horrid brat that annoys Ganondorf. Villager, on the other hand, is believed by Ganondorf to be a worthy successor, although Villager isn't doing anything malicious on purpose. His pocketing technique is what intrigues Ganon the most, and he plans on training Villager to capture Light Arrows. Meanwhile, Villager is a peaceful kid who just spends his time decorating the living space and cuddling Pikachu. Bowser Junior hates him with a passion.
Team 6:
A strange group. Mega Man, being the most human, kind of speaks for the group. Donkey Kong leads, and is mostly there when a fight is held. Otherwise, he's doing stupid ape things. Game and Watch is trying to comprehend the world around him, and strangely idolizes Mega Man. Rush and Duck Hunt Dog have adventures, and accidentally cause mayhem that's usually blamed on the villains. Only G&W knows, but can't express it to the others due to his limited ability outside the Flat Zone.
Team 7:
Wii Fit Trainer constantly leads exercises, ones that everyone hates. Fox and Pit became close friends, and usually go around pulling pranks and such. Fox pulled something doing exercises, and now talks nasally until Doctor Mario can see him. Alph usually tags along and takes notes of their actions for Koppai. When training together, you can see their true potential, and are a powerful group.
Team 8:
While Luigi takes charge, Rosalina ends up being the leader due to Luigi's cowardice. Olimar and Luigi get along, and practice together, while Luma frightens the Pikmin and can cause some unnecessary conflict. Ludwig feels the odd man out, but has learned to get along with Olimar and talk about classical music with Rosalina, but secretly knows he must destroy them to re-earn his place as "father's" favorite. Luigi knows this, but will carefully attempt to help Ludwig, who still bullies him, just less antagonistically.
Team 9:
Here, Little Mac feels extremely out of place. However, he agrees to help the others in any way he can. Toon Link can usually be seen training with Yoshi, and has become close friends with him, to the point of understanding the Yoshi language. Roy, on the other hand, constantly challenges Little Mac in and out of the Clown Car. While Mac usually wins, he has a tough time fighting the Car's boxing appendages, and knows he must improve even more. Everyone gets along for the most part, although Roy can be a jerk, and they enjoy fighting each other.
Team 10:
The fastest team out there. Falcon, Sonic and Greninja constantly train, beoming faster, stronger and better. They all tend to get along, especially Falcon and Sonic. Greninja, on the other hand, is intrigued by Larry's slowness, and trains him separately to be more ninja-like. It's not going well. Larry's sporty attitude allows him to occasionally bet wagers with Falcon, and they've shared some time earning cash from other Smashers doing so. A formidable team, overall.
There's 5 more teams I'll add later.
On the other hand, the rivalry between 
