How would you go about creating Mario’s stage level ?

How would you go about creating Mario’s stage level ?

Would you lay it out in Construct 2 or would use use some sort of Voodoo XML file that lay out the elements and then read from it and create the objects as the player walks forward.

I wonder how they do it in the early days when ram is a problem.

The beginner tutorials on platformers should get you started. Also look up some of the tutorials and forum threads in regards to procedural generation of levels.