By eating a clove of garlic, Wario transforms into Wario-Man and becomes stronger, faster and takes less knockback, and receives floaty properties. His attacks are more powerful and he can also jump higher than normal. Wario-Man is one of the many Final Forms in the game, which means he is a separate character from Wario.
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Prior to Beta, when Wario starts his transformation, he would (accidentally) change into a version of Wario-Man similar to Zangief from the Street Fighter series.
In version 0.9a of the SSF2 Demo, whenever Wario-Man tries to grab the opponent, it would glitch and Wario-Man would continue to repeat the grab animation until he returns to normal and, like all the other Final Forms (except Fire Mario), he cannot use his up smash. If he tried to charge the Home-Run Bat he would be stuck in the animation, but he would still be able to hit opponents and cannot be hurt himself. This was fixed in v0.9b.