Basically... Super Smash Bros Melee was a big hit on the Gamecube, or at least as big a hit as any game on the Gamecube could be. And this was at a time when what we would now recognize as the Competitive Fighting Game Community was forming. Melee was distinct from other fighting games, but it had a lot of skill ceiling and room for people to do things that you couldn't do in other fighting game, thus it developed a competitive "scene" like many other fighting games. People would get together to play semi-organized and later fully-organized tournaments of Melee, just like they did for games like Street Fighter or Tekken.
The difference is. . . most other fighting games, the publisher looked on this as a good thing. Street Fighter or Tekken developing a tournament circuit was just a development of the arcade scene that was native to fighting games since the genre started. Nintendo, however, was much more skeptical of this movement. Their paradigm for a game wasn't "people competing in an arcade to be The Best", it was "people playing it at home for fun, whether they win or lose". It didn't help that the way the Melee scene ran their tournaments was *extremely* constrained, with most of the content of the game officially or unofficially banned; content, I would note, that Nintendo included out of a desire to make the game more appealing to the average player. The way the competitive scene played Smash was alien to the way Nintendo wished to market Smash to their larger customer base.
Nintendo thus responded in two important ways. First, they did not provide any official support or sanction for competitive Smash, as a matter of policy. They *mostly* didn't interfere, but they definitely didn't promote or fund it, not in the way most other fighting game publishers did. Second, they released a sequel, Super Smash Bros Brawl. . . and they made a *lot* of mechanical changes to it, most of which were antithetical to the competitive scene: adding in more ways for random chance to be a factor, and removing various bugs and glitches that the Melee scene had turned into core gameplay skills. The Melee scene viewed these are collectively amounting to "Nintendo waging war against us", and they've had a persecution complex ever since. And however much you might think they are objectively right about whether Nintendo was opposed to them ( Nintendo *absolutely* was ). . . it doesn't change that having a community whose identity revolves around "The Man is out to get us"? Is not exactly the healthiest environment. Thus you get the present, where the Melee-derived Smash community largely views themselves as self-righteous martyrs.
( Oh, and this is entirely separate from the *other* problem in the Smash community: rampant sexual abuse. Because as it turns out, a community full of competitive would-be elites who all started as little kids, then grew up into adult celebrities in said community still composed mainly of kids, all while isolated from the larger world by a sense of persecution? Is a *great* environment for sexual predators! )
