Like cel shading, it's an art style that appears in a number of games:
Is "papercraft" an actual industry term? I've never heard it used before and it doesn't look like much; this is opposed to Cel Shading, which is a commonly used term to describe an animation technique.
It sounds like the guy in the Nintendo Direct video said "papercraft" when talking about Paper Mario, but what do I know. Maybe he said something completely different.
@believer258: well, like cel-shading, claymation and rotoscoping, its origins are outside video games, but developers use the term to describe their game's art style. Seems that it's a more recent trend, as the games I listed above as examples are all from the last couple of years.
Well, I tried a quick Google search and it doesn't seem like a widespread term. I'm just wary of making up a term and giving it a page, even if it is something that could make sense as a future term.
Try searching around and seeing if this is already a concept. There might already be a term for it. If not, go ahead, but be ready to change it and/or delete it if the industry ever ascribes its own word to it.