Yes he was amped by the
Little Luma. Just how can you miss him constantly popping out of Mario when ever he spins which was granted through the little Luma. Mario is only able to use launch stars or perform MFTL+ speed featS because of that luma amping him up.
Paper Mario was amped by crystal stars.
Genjutsu is by basics illusion technique, the realm of King Boo with stars I believe is to be King Boo's own version of genjutsu or more specifically (probably) Tsukoyomi. I mean he is canonically stated to be "The Master of Illusions" and this is not the first time he's done this. I know that the Naruto and Mario verses are not the same but I'm trying to give a good explanation.
But the comment was actually a little funny.