The issue with depixelizing pixel art is that you need an AI that can identify semantically what the features in the sprite are. When you look at Mario you know you're looking at a stout little man with a hat, you can identify his eyes, ears, nose, hair, hat, moustache, shirt, gloves, overalls and shoes. Given that knowledge, if I were to depixelize Mario's sprite, I'll know the rough shape of his shoes and where the shading should go and what shape it should have, i.e. I can reason what the 3D shape is and how the 2D shape was derived from that. I'll also be able to identify which lines were put there to make sure separate elements can be legible and not make those thicker than needed. Or that his eyes blend with his hat simply because there aren't enough pixels to make them separate.
For simple shapes, like the background, their algorithm works really well, but for complex objects it fails, because it distorts details that were put in with very careful thought and completely depend on the resolution. Such small sprites rely a lot on being looked at by someone who can identify semantically what they're looking at, and any really successful depixelization solution will need to be able to understand what basic shapes the sprite is made of based on what it's supposed to represent.