Note: Rainbow Drop room is through the door directly below where you begin the area. You need the Needle Ability to break through the blocks to reach the Rainbow Drop. You can gain this later in this area and then replay the level to gain the item. You can immediately exit the level after gaining.
Use your Cutter Ability to defeat the enemies here. Use it first on the Waddle Dee to your right and then begin moving in that direction. Fly right, underneath the Gordo. Defeat the Cutter as you move past. Continue along the top of the screen, defeating enemies and dodging the second Gordo. At the last tree with branch platforms there will be a Star on the highest one. Move up and grab it.
Move up to the Gordos moving vertically here. Wait for a gap to appear and quickly move through. Do this for the next Gordo. Destroy the Bronto Burts with your Cutter Ability as needed. You can fly below the last few sets of Gordos. When you reach the end of the area, defeat the Cappies dropping from the Star Blocks. Destroy the middle Star Blocks to find a Star. Collect it and fly up to the top of the screen. Enter the door there.
Move right along the top half of the screen. Defeat the Bronto Burts with your Cutter Ability as you come to them. Continue on to the Scarfies and defeat them in the same way, but make sure that you're fair enough back so that you don't take damage from their explosion.
Defeat the Poppy Bros. Jr. rolling his apple down the blocks and then move underneath them. Break the Star Block with your Cutter Ability and collect the Pep Brew that drops down. Be careful of a Waddle Dee suddenly hurtling toward you from your left. Move out from under the blocks and drop your Cutter Ability. Move right and inhale the Spikey. Copy his ability to gain Needle. You will need this ability to gain the second Rainbow Drop, so keep it safe.
Wait for the Sir Kibble to throw a projectile and then move past him to the very top of the screen. Move along the top and use your Needle Ability to defeat him from above. Drop down and break the central Star Block of the four to find a Star hidden there. Grab it and defeat the second Spikey.
Continue right, along the top of the screen. Defeat the Bronto Burt that flies past you if you need to. When you reach the group of Star Blocks with the a Poppy Bros. Jr. walking along the top and another trapped inside, break the blocks on the right side. A Star will be hidden in one of them. Defeat either of the Poppy Bros. Jr. with Needle if you need to. Continue right.
Move over the first Gordo and then continue past the rest of the enemies, only defeating them if you need to. When you reach the end of the area, break one of the Star Blocks that's trapping the Gordo and allow the Gordo to move away. Enter the door to complete the area.
Rainbow Drop Area
Re-enter Area 2 and drop down to the ground below where you begin the area. Enter the door there. Drop down to the ground and use Needle on the blocks blocking the opening to the Rainbow Drop. They will be broken. Drop down into the area below and grab the Rainbow Drop. As soon as you do, exit the area. You won't lose the item that you just gained. Continue onto Area 3.