Everything plants on the ground
The building and pickup pictures were large squares with the real art sitting in the middle. The game planted the bottom of that empty square on the grass, so houses and mushrooms hung in the air.
Those images are cropped to their feet. Draw code lines the bottom of the visible sprite up with the tile. Town hall, the bakery, the mine, trees, stone piles, and every mushroom type sit on the ground the same way.