What you're seeing in the video above is the Sourcemod Entertainment System (SMES), a server plugin for Counter-Strike that lets you start up a video game and play another video game inside that video game.
According to creator skwumpy, it works like this: you can pick up a cartridge in the game world, insert it in the console (yes, yes, I know, it's a SNES), then pick up a controller and start playing.
As a nice touch, everything is animated: the console's switch actually turns on, and the controller's buttons depress.
Looks too good to be true, right? Well, it kind of is. That's definitely Super Mario Bros. running on the console in the video above, but it had to be specially programmed for the service. So you can't just boot up any old ROM and expect to play it.
Still, just the fact this is running at all seems bananas.