It means he can't physically get a better time, but it does not mean his inputs are matched up exactly with the TAS. SMB1 level transitions are based around the "frame rule", which means you don't advance to the next level until the number of elapsed frames from the start of that level is a multiple of 21. This means it's possible to have slightly imperfect input on all levels except 8-4 (the last level, so no waiting to advance to the next level there) and still get the same time as the TAS (unless the TAS reached the end of the level with no frames to spare). The TAS aims to reach the end of each level as fast as possible even if it would mean no overall time saving because of the wait for the multiple of 21 frames.
I think this mechanic has been very beneficial for speedrunning, because it gives clear sub-goals. When you hear runners talking about "saving a frame rule", that means reaching the end of the level in time for an earlier multiple of 21 frames.