Link’s Awakening is unusual in the Zelda canon for being set entirely on Koholint Island, which exists outside Hyrule’s geography. It is also unusual for featuring characters from other Nintendo franchises as NPCs — something that has never appeared in another mainline Zelda game.
Goombas and Bloopers from the Mario series appear as enemies. Chain Chomp appears as a village pet named BowWow who must be rescued. A Yoshi Doll is the first item in the game’s trading sequence — a chain of exchanges involving fifteen different items across the island that leads to a Boomerang, typically the game’s final reward.
The Mario presence was not explained by Nintendo for years. The eventual developer comment — that Link’s Awakening started as a side project where a developer ported Zelda mechanics to different assets for testing, using Mario sprites as placeholders, and the placeholders became part of the game’s identity — frames the franchise crossover as an accident that became intentional through attachment.
The Yoshi Doll is the trading sequence’s only item that is explicitly a toy of another Nintendo character. A child in the village collects Yoshi toys and trades a Ribbon for the doll. The Ribbon leads to a chain that eventually reaches a Boomerang that Zelda traditionally gives you at the start of a dungeon. The game makes you trade a doll for what used to be standard kit.

Currently on my first run and now I have to go back and look for this. Worth the detour.
Found this by accident on my third run. Came here to understand what I was actually looking at. Great write-up.