From the Super Mario Wiki
Caged Ghosts are close relatives to Dangling Ghosts that grow from drainage grates in the floor. They are gelatinous ghosts found mainly in World 3 in Super Mario World 2: Yoshi's Island and Yoshi's Island: Super Mario Advance 3. They also appear in Yoshi's New Island. They spit green Shy Guys at Yoshi as their primary attack, who may turn them into the ghost's only weakness: Eggs.
There are two different kinds, the ones that are squeezed into sewer tunnels, and the large round mounds. By being hit with eggs, the ghost will shrink/recede, until it's at its farthest point, then after a few seconds it will grow out again.
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