The first enemies you encounter in this level is a trio of Goombas on inner tubes. Bounce across them and take the pipe to the next section.
The side scrolling segment begins with you in front of a large pool of water guarded by another inner tube Goomba, and below it is a Roulette Block. You can explore this place if you like, but the Green Stars and the Stamp are further in this level.
Cheep Cheeps patrol the waves at the larger body of water you encounter. This marks the start of the big swimming section. The Clear Pipes below these Cheep Cheeps don’t lead to any of the collectibles, so ignore them.
The bigger threat here is the Porcupuffers. They are big and surprisingly fast for their size. It’s best to knock them out from a safe distance or just avoid them altogether.
Green Star #1
After you get past the Porcupuffers, you encounter a Clear Pipe leading to the next area. Ignore it for now, and instead let the waters take you up toward the roof of the cave, up to a small ledge holding the first Green Star.
Stamp
The waters beyond the Checkpoint Flag are filled with Cheep Cheeps. As you swim forward, you come across a sign pointing in the direction you’re supposed to go. Ignore it for now and swim up toward the roof of the cave to reach a hidden side chamber that contains the Stamp. More importantly, this chamber contains an ? Block that transforms into the Cannon Box. Keep that hat on for the rest of the level, by any means necessary!
Green Star #2
With the Stamp collected and the Cannon Box equipped, follow the sign down through the Gold Rings into the next section. Two Porcupuffers patrol the area near a cracked section of the wall. Opening up that wall with the Cannon Box reveals a pipe that takes you to a bonus chamber filled with Coins and the second Green Star.
Three columns of Porcupuffers block this section of the cavern. Blast them with the Cannon Box if you can!
Green Star #3
Don’t take the first pipe you see here; it will cause you to miss the third Green Star by warping you straight to the end of the level. You can swim up the third alcove that the Porcupuffers occupied to find a hidden area. Enter the Clear Pipe that you find, then take the passage to the right above the wooden crates to locate the star. This side area will ultimately put you in a better position to reach the top of the Goal Pole.
After beating 3-5, you unlock a pipe that leads to 3-6, and a direct path to 3-7. On the other side of 3-6 is a patch of ground you can investigate to reveal another pipe that will take you to a 1-Up and give you a nice view of World 3.