Fall damage
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Fall Damage is damage caused by falling from a high height. There are two types of fall damage: Small Fall Damage and Large Fall Damage. Small fall damage usually occurs whenever Mario's falling faster than 55 units per frame (i.e. he has lower than -55 vertical speed) and has fallen more than 1150 units from his peak height (the highest height he reached since he last became airborne). Large fall damage usually occurs when Mario has less than -55 vertical speed and has fallen more than 3000 units from his peak height. Under some circumstances, Mario will not take fall damage, such as in certain terrain with a relatively steep slope, or when landing on snow, sand (both of these provided you don't dive with Mario facing flat[1]), and lava. Mario also does not take fall damage if he is twirling. A condition exists within the game for Mario to take damage starting at Mario falling 600 units from his peak height, but this condition is never met in-game .
The damage received from each type of fall damage is as follows: 2 sections for small fall damage, 4 sections for large fall damage, and without a hat, these values become 3 and 6 sections respectively. Taking small fall damage also squishes Mario for 30 frames. If Mario is holding something and takes large fall damage, he will drop what he is holding. This can be used to perform Instant Release.