From the Super Mario Wiki
The Steam-O-Matic is a steam-producing device owned by the famous wrestler Sgt. Slaughter.
After the Steam-O-Matic is repaired, Mario, wanting to make sure it is fully functional, goes inside of it, only to become stuck; to make matters worse, Luigi and the recently arrived Sgt. Slaughter turn the Steam-O-Matic on to full power.
Eventually, after a long while of pounding on the Steam-O-Matic door, Mario is able to break-out of it, though he is shrunken in size due to extreme steam exposure.