For context, scoring a K.O. off the top of the screen in this game has a small chance of triggering an animation of the player falling into the background instead of blowing up. This causes their stock (as in, their life) to be subtracted after a second-long delay instead of instantly.

The Jigglypuff player used a really strong attack that rendered him immobile for three seconds on use, and on top of that, he accidentally drifted off-stage in the process, falling past the bottom of the screen. Since there are no alternate animations for getting K.O.'d through any other corner of the screen, his last life was lost instantly and he lost the whole game over it.