Yesterday was an absolute mess online. Obscene amounts of lag (at times, the game would freeze for 5-10 seconds) and I got dropped from a match once. Not being able to spectate in the Arena while a match is in progress is lame. Nothing more fun than just sitting around doing nothing.
It was better today, though. I set up my matchmaking to be 1v1 stock with no items and no stage hazards, and aside from one 4-player FFA with no items/hazards, I got matched up appropriately. Mostly competitive matches, too. A little bit of laggyness but I'd say it was "acceptable".
Played over local wireless with a co-worker during lunch and I was surprised at how well that worked. Going to see what the range on that is tomorrow (he hasn't signed up for the Nintendo online service yet).
One problem I keep running into is every time I boot up the game and go into "Quick Play" I get rejected because of "network is busy or the connection is unstable". I can still do Arena matches but Quick Play always fails. But then if I go into Local Wireless, exit out, and then go back into Quick Play it lets me in and works without a hitch. I don't know.
I've had better luck since doing 3-stock, 5 minutes, No Hazards. For some reason 7 minutes clusters me closer to FFA players, which kind of sort of makes sense, but is still awful.
About 75% of my 1:1 matches haven't had notable lag.
Those are the MM settings I've been using today and my experience has been similar. Even the one FFA match I had mixed in (w/ no items and hazards) had fairly minimal lag.