There was a ton of innovation in the gaming industry at that time. Nintendo realised their flaws with their previous incarnation and made an innovative system that could expand its capabilities through the use of the expansion pins in the cartridge (why we could add chips like SuperFX to games on a per-need basis).
Also, as controversial as it is, perhaps it was Nintendo's tight leash on third parties that created good games from them. Think about it: with all the freedom that third parties have now, they can pretty much release what they want whenever they want. Back in the days of the SNES, regulation was so tight that many (successful) third parties worked hard for the little profits they got after paying for a Nintendo license, cartridge costs, etc.
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