Maybe there's a new villain in the kingdom who has a device that can transform enemies into harmless forms, like turning Luigi into a baby. The villain wants to use this to stop Luigi and Mario from interfering with his evil plans. Mario has to protect baby Luigi from the villain's minions while looking for a way to break the transformation. This could involve exploring new areas of the kingdom and meeting new characters who might have the knowledge to reverse it.
Mario would definitely be a main character. Since Luigi is his brother, he would be the one most concerned about Luigi's transformation and would do everything he could to help him. Princess Peach could also be a main character. She might offer her castle as a safe place for baby Luigi and use her resources to find a solution. Toad could be there too, helping Mario with taking care of Luigi and providing useful information about the kingdom that could lead to reversing the spell.
In a 'luigi turns into a girl' fanfiction, the plot might involve Luigi being transformed due to a strange experiment gone wrong in the Mushroom Kingdom's science lab. His new female form causes a stir among the inhabitants. He could struggle with how others perceive him now. For example, some characters might treat him differently. However, he also uses this opportunity to see the world from a different perspective and becomes more confident in himself over time.
Adventure is also common. They could be on a quest to find a lost item or to explore a new part of their world. It makes for exciting reading as they face various challenges as babies. For instance, they might encounter a small stream that they need to cross but are too small to do so easily. And they have to figure out a solution together. This kind of adventure - based theme is quite popular.
Bowser could be the main antagonist. He might see Luigi's transformation as an opportunity to mess with Mario and the Mushroom Kingdom. He could try to use Luigi's new form to his advantage, perhaps by trying to make Luigi a spy or by using his new identity to cause chaos among the kingdom's residents.
A really fun 'baby daisy and baby luigi fanfiction' could be set in a world of toys. They are toys themselves and they have to work together to escape from the clutches of an evil toy collector. They make friends with other toys along the way and use their unique skills, like baby Daisy's ability to find hidden paths and baby Luigi's courage, to overcome the challenges.
Peach could be an important character. As a friend of Daisy and a princess in the Mushroom Kingdom, she could offer her wisdom on raising a child. Also, Yoshi could be there. Yoshi is always friendly and could be like a protector for the baby, watching over it when Luigi and Daisy are busy.
One idea could be that in this fanfiction, Wolverine turns into a baby due to a powerful mutant's accidental spell. The X - Men then have to take care of him while also trying to find a way to reverse the transformation. They might discover new aspects of Wolverine's personality as a baby, like his unwavering determination is now shown through his attempts to crawl towards danger.
One idea could be that baby Mario and baby Luigi get lost in a magical forest filled with strange creatures. They have to use their baby wits and little jumps to get through obstacles and find their way back home. Maybe they befriend a little fairy who guides them part of the way.
You can start by focusing on their innocent personalities. For example, show baby Luigi sharing his favorite toy with baby Daisy. This simple act can create a warm feeling in the story.