There were too many sprites on the screen and the first one loaded in(Wetnosaur) was replaced with the newest one loaded in( Either a Tenda or the Sign sprite). But the game still treats the sprite as an enemy sprite, so the game tried to make you fight the Tenda, which doesn't have enemy data, so it called on garbage data instead to fill the empty values for enemy data that it needed, which couldn't be loaded properly. Most of the time the data crashes the game since they're values that can't be read. Sometimes you'll be able to actually fight, but it'll still crash when the enemy attacks since their moveset is garbage'd too.

This is very strange. I encountered this glitch the last time I played Earthbound too, and it scared the heck out of me. What's even more strange is that not many people have encountered it. I'll ask the Earthbound community on Reddit about this to see if anyone knows anything.

i wish i could replicate this glitch

So he WASN'T crazy...