I think he meant that he has an emulator like FCEUX or Mesen as a software for game editing.
Since original SMB doesn't have any free space worth of mention, you'll need to use a different mapper and expand the ROM for most of your hacks.
You need to load different tiles into PPU for Luigi, create another sprite data table and read it instead.
Higher jump can be achieved by setting a different gravity value into RAM.
You can alter background graphics by editing tiles.
A new powerup is probably the most difficult task. Basically you need to create a new object index and add it to all necessary tables.
SMB disassembly can be helpfulhttps://gist.github.com/1wErt3r/4048722