As Mini Kirby, Kirby is shrunk down to a much smaller size. In this form, Kirby's combat ability is reduced, losing his ability to inhale, float and slide. The benefit of this ability is to go into small cracks and tunnels, which gives access to secret treasure chests.
In Kirby's Adventure, unused sprites for a smaller Kirby can be found suggesting that there was plans for a copy ability where Kirby shrinks. Masahiro Sakurai confirmed this in 1993 interview.