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Obviously Nintendo doesn't care in the slightest about the story, but I took the very opening to mean that the story itself is meant to be a fairy tale, one about Mario.  So Super Mario Galaxy and Super Mario Galaxy 2 are simply two separate fairy tales that exist independently of one another.  And if they're fairy tales told within the Mushroom Kingdom, it could be implied that if there is a "continuity" within the Mario universe, then these never happened at all within the timeline.  But really, it doesn't matter.  If we can suspend our disbelief enough to believe an Italian plummer fights turtles and helps save talking mushrooms from an even bigger turtle, then I think a "timeline" is rather superfluous.