This level introduces Boos (called 'Boo Diddlys' in this game) and bats (Batons). Boos will only move when Mario isn't looking at them, so you'll need to turn your back to lure them into position or past them. Batons fly in predictable patterns. There are also platforms that disappear and reappear, requiring good timing. A Super Mushroom is usually available early on. Look for a hidden Carrot in a block above a pit in the middle of the level; Bunny Mario's float is incredibly useful for navigating the disappearing platforms and avoiding Boos.
Strategy: When dealing with Boos, walk slowly past them while facing away, then quickly turn to freeze them if they get too close. For disappearing platforms, observe their pattern before attempting to cross. Don't rush!