In an interview with Joystiq, which covered everything from Donkey Kong to Kid Icarus, Shigeru Miyamoto let it slip that Skyward Sword actually takes place in Hyrule while discussing the importance of the new MotionPlus controls:

“Even something as simple as the aiming, which is handled not necessarily with a pointer but by moving your hand around, just like you would aim an item in real life, will make it that much easier for you to feel like you’re in that world of Hyrule and experiencing the adventure that Link is, because you’re so connected to what’s going on.”

Miyamoto also went on to talk about Skyward Sword‘s unique graphical style, explaining that it was necessary in order to create exaggerated characters and enemies to help players more easily understand and use the MotionPlus controls.

That Skyward Sword takes place in Hyrule is big news, considering that we’ve been told Link is a boy born in Skyloft, a land above the clouds. Although this is only speculation, it could mean that the land beneath the clouds is, in fact, Hyrule – or will become Hyrule. Only time will tell!

Source: Joystiq