Dynamic Level Rearrangement

Dynamic Level Rearrangement, abbreviated to DLR, is an algorithmic change to the stages within Super Mario 64, and usually occurs after sighting the anomalous White-eyed Chomp. The effects of Dynamic Level Rearrangement vary but it can only involve a level's textures, objects, text strings, and music.

Much like the other anomalies, Nintendo's experimental A.I. is the cause of this. It is able to modify existing textures but can't produce entirely new ones as per the limitations of the AI. The same applies to objects in the level, it can only modify and reposition existing objects. Rarer cases involve text strings getting changed, and also music swapping/rearrangement.

Functionality
The Dynamic Level Rearrangement system is able to alter stages. In most cases, the system rearranges the objects of a level to create a brand new mission objective. This is presumably done to make the mission easier or harder for the player and their skill level, which is the naive reasoning for the A.I.'s existence. It can also change the textures and skybox of a level to change it aesthetically, though why the A.I. does this is unknown. Sometimes, the A.I. pulls assets from the beta of Super Mario 64 when doing this.

In more rare cases, Dynamic Level Rearrangement changes the text strings of signs and the music played in the background. For text, this seems very buggy as it can often repeat words on loop for seemingly no reason, or just bug out and have "null" lines. For music however, the system seems a lot smarter and is sometimes able to create brand new compositions for the stage.

In the older written reports, claims were made that other levels and even the Castle itself was effected by Dynamic Level Rearrangement.

Documentation
There have been reports of DLR from players over the years, but for a long while there hadn't been any authentic evidence of it ever happening. There hasn't been any video evidence up until recently with the advent of modern technology and the spike in intrigue with Super Mario 64 phenomena.

Case #1

 * Video: 

This player had discovered an instance of DLR within Bob-omb Battlefield. The entire stage is given an orange tint, reminiscent of a sunset backdrop. The star locked behind the Chain Chomp's gate had been moved around to the top of the mountain. A row of coins had replaced the star's former location. Shortly afterwards, the footage cuts to the player collecting the star on top of the mountain. After beating the stage, the player's game crashes there.

Case #2
This other player had Dynamic Level Rearrangement affect Hazy Maze Cave, changing the textures to a blue tint and giving the walls a brick texture as opposed to the rocky walls of the original. This more closely resembled the original underground levels of Super Mario Bros.. All of the Scuttlebugs had been replaced with Goombas.

The most striking change was the second mission, now named "Gold Mine for 8-Coins". The red coins, which used to be situated in one room only, had been moved around the entire stage. This included replacing the place of another star, which had seemingly been moved as well. The player hasn't commented on where this star has moved.

Theorizing
It's highly likely that Dynamic Level Rearrangement is an algorithm spawned from Nintendo's experimental A.I. as an attempt to personalise the game to the player's skill level, granting them an easier or harder mission suited for them. Some speculate that DLR is an innocent patchwork of the A.I., attempting to turn the foul and vile algorithms into something that will help the game experience instead of messing with the players who fall victim to it.