The problem with Mario Sunshine is that it's sandwiched between Mario 64 and Mario Galaxy. There's quite literally no way you can look at Sunshine and say it's an outstanding game when the Mario before it and the Mario after it are masterpieces.
Sunshine is an alright platformer but it's a weak Mario game. The mechanics, presentation, difficulty balance, and lack of variety makes the game feel like a spinoff rather than a main Mario game. They built the entire game around the FLUDD system, and the system just wasn't that good.
Mario 64 redefined what a platformer could be thanks to the camera, controls, variety, graphics, music, and of course gameplay mechanics. The exact same could be said for Mario Galaxy. Mario Galaxy is, from top to bottom, a phenomenal platformer. It does everything right -- the presentation, mechanics, graphics, variety, music -- all exceptionally well-crafted. Yes, the Starbit system isn't excellent, but unlike Sunshine, they didn't build the entire game around the system. The game took full advantage of the hardware it was on and created what is, without a doubt, Nintendo's best creative effort of the past decade.
Given all of the above, it's easy to see why Sunshine has the reputation of being a mediocre Mario game. After people played 64 they expected Mario 128 to be another revolution. After people played Galaxy, they fully realized that Sunshine was a bad Mario effort from Nintendo.