The Spritelings are Wario's Castle
The Black Jewel uprooted you from your home, putting you in a strange world in the sky, and turned your precious treasure into more-than-somewhat ugly monsters. At the end of the game, the Spritelings offer to repair Wario's castle, to varying effectiveness depending on how many you saved. Suppose, that similar to Wario's treasure turning into enemies, the Spritelings are actually bits of Wario's Castle? Or rather, segments of its collective wealth, considering the different ending results.- This is simply impossible. The game's intro says that the Spritelings are forest sprites that live in a sacred forest and existed long before Wario's castle.
One of the worst endings are canon
Wario doesn't save many Spritelings, and barely gets a place to live. This is why he move to a house.