From the Super Mario Wiki
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Found on a tree reached by flipping into 3D next to the sign to the right of the "49" symbol in Overthere Stair, the Yellow Apple restores 5 HP and cures poison. If the player tries feeding Peach this apple, she wakes up from the deep sleep caused by the Golden Apple and wonders what's happening. Then, suddenly, she grows a mustache. A few seconds later the effect wears off, the mustache disappears, and she goes back to sleep.