Paper Mario is a franchise shaped, in many ways, by its identity crisis. A once-beloved arm of the Mario franchise has never been the same since Sticker Star. And, in the simplest of terms, very few people exist who prefer the modern approach of Paper Mario to the classic. Many appreciate it (it may be pertinent to note I am not one of them), but even they wonder why it came at the expense of what came before.
One prominent argument, especially from those tired of seeing nothing but praise laid at the first trilogy's feet, is that these games weren't quite as good as they are looked back upon, for a multitude of reasons related primarily to the gameplay, mostly. I believe, however, that there are a number of narrative elements that go unchallenged- some of which explain why the series went in the direction it did, and others which lament the fact and sing of missed potential. Time to prepare your paper puns, because this journey is about to unfold.
Unlike most games I have covered thus far, all three Paper Mario games have lore and important narrative before the title screen appears. Consider the title screen used as a header above to be more for bookkeeping.
This is the key world-building stuff, you're going to want to note this down.
Early in development, the game we know today as "Paper Mario" began life as "Super Mario RPG 2". Super Mario RPG was a SNES game developed by Square of Final Fantasy fame, known mostly as "the game Geno is from", and although Paper Mario is not considered a sequel of any sort, a non-zero amount of influence lingers in the corners.
Both games are about the home of wish-granting beings living high above in the stars. Although Star Haven is different from Geno's Star Road, there is enough of a relation to stand on.
Again, we're not actually going to be meeting Geno, although I suppose we don't exactly know for sure...
Unlike in SMRPG, where the Star Road had the power to grant wishes innately, Star Haven's wish-granting power is focused on a specific treasure.
These Seven Star Spirits are responsible for using the Star Rod to grant wishes, although whether or not they do anything of their own volition is less clear. I suspect they don't.
This is your reminder that, story focused as it is, it is still a Mario game, and we're going to be just as focused on making you smile as we are telling a coherent narrative. This is going to be my thesis later, as weird as that is to say in conjunction.
This is the only time in which the fact every character in the story is made of paper is relevant to the narrative being told here in 64- there's a few visual gags later, but purely visual. Although we're not really led to believe that Bowser literally taped Kammy into this book to teleport her to Star Haven, this is more symbolic.
An alternative question is "what was the story the narrator was intending to tell"? All good narratives have a conflict, or at least a "something happened". But for the "and then", this story didn't seem to be going in any such direction.