The Sega Master System had a long shelf-life in Europe and an even longer one in Brazil. It was popular enough in these markets that it outlasted the NES by several years. It even survived long enough in Brazil to get a port of MK3 released. Unfortunately, 8-bit consoles just aren't able to handle games like the MK series. If they didn't try to replicate the look and feel of the original they might have been able to pull-off a decent fighting game. Instead they tried too hard to duplicate the arcade experience on a platform that just couldn't handle it.
Play control:
It was very difficult to rank this above the Gameboy version because the control makes this edition almost unplayable. To compound matters, the Sega Master System only has a two-button controller. No start or select button either, just one more button than a 2600. This means the only way to block is to hold punch+kick together. Needless to say this makes the game play difficult. Even with a third button this would still play badly though.
Graphics:
They did about the best they could with the colors available. The backgrounds consist of roughly 2-4 colors with the characters taking up the rest. The animation is pretty bad though. When you jump it looks like there are no frames between the "standing" and the "fully in the air" animations. Uppercuts and leg sweeps have the same problem.
Sound:
The Sega Master System had some decent sound capabilities, see Phantasy Star, Outrun, or Ys for example. The MK2 soundtrack is identical to the scratchy Game Gear version. They could have done better in this category.
Extras:
Three levels of difficultly to choose from.