What does the exclamation point over mini-Mario's head mean?

While exploring Chucklehuck Woods, I noticed an exclamation point appear over Mario's head. After some experimentation, I found the mark will only appear over Mario's head if he stands in a specific spot after being flattened by Luigi's hammer.

What does the exclamation point over a mini-Mario's head mean?

According to Mariowiki:

Mini-Mario involves Luigi standing behind Mario and hitting him with a hammer. Mario then shrinks to about half of his normal size, allowing him to fit through gaps normally inaccessible. When this happens, the bros will be separated, though the player can switch control between them.

In addition, Mini-Mario acts as a sort of dowser, generating a "!" bubble above his head when he is near a hidden underground treasure.

Digging underground with Luigi in that spot will get you the treasure. Do note that the positioning when digging up treasure is fairly strict, so it may not work the first try.