It's probably fair use. There's no harm to the market for the original work (ROMs and assets aren't shared, only the decompiled/recreated code), it's not made for profit/commercial use, the nature of the use and work is about the code and not the artistic aspects of the game, etc.
Nintendo hasn't gone after the repos because they have a very solid fair use defense. They have, however, taken action against shared EXEs derived from that source code which DO contain the copyrighted SM64 assets. The fact that they went against that and not the code-only project shows they probably agree with this analysis.