It's mostly argued around or against the application of fair use. I suggest consulting a lawyer if you're truly interested, as it quickly gets into legalese around what constitutes ownership, distribution, etc. Throw in a lack of extensive case law and you quickly get into opinions rather than legal bases.

I get the sense that these disassembly/decompilation projects believe that some types of IP-laden asset data can be shipped embedded into the project — not necessarily "legally", but in that they'll likely get away with doing so indefinitely — as long as:

1. those assets are stored in proprietary formats that only the game code itself understands, and

2. no tool exists in the project to extract the assets from these proprietary formats into open formats, unless that tool itself exists only in source-code form in the codebase, and requires the ROM as an input to compile it (even if in the case of such a tool, the ROM is doing nothing but serving as a "key" to unlock compilation.)

Basically, if you have to prove you have your own copy of the IP in order to make their embedded copy of the IP "legible", then it's very hard to construct an evidence-based DMCA takedown order that actually makes any coherent point about the project "distributing" said IP.

That being said, shipping assets like this at all, even if you "can get away with it", is ultimately just a kind of laziness / shortcut-taking. They do it because there's either no clear/simple/obvious way to automatically extract the given asset data from the ROM (e.g. because the relevant data is split up into various data planes + metadata bits that are stored "exploded" all over the ROM), so they just did it once by hand, committing the results; or because there's no clear/simple/obvious way to store the extracted asset data such that a regular compiler/assembler natively understands how to embed it into the binary in the particular form it was found in the original ROM. (Remember, re-assembling/compiling to the original ROM is always the test these projects use to ensure their disassembly/decompilation is preserving semantics. So they need to replicate every weird layout quirk the original dev tooling imposed upon the original ROM. And sometimes the original dev tooling included special-purpose domain-specific asset-codegen tools that aren't part of regular compiler toolchains.)

What these projects should actually be doing, is taking on the schlep: writing the extract tooling anyway, even if it's just "copy these bytes from here and these bytes from there, and spit them out as hex in an .asm file with this header"; and/or writing matching asset-codegen tooling to the tooling that likely existed in the platform SDK, to run before compile/assemble time, converting the extracted ROM asset files into a form (probably a bunch of little assembly files) that will land in the right places when linked back together to form the original ROM.

Its not requiring you to provide your own ROM so this demo very sell could get DMCAd but Nintendo layers are surprisingly asleep.