Hylia

Hylia, also known as Her Grace and later Zelda, is a goddess featured in Skyward Sword and first mentioned in Twilight Princess. She is depicted throughout the world by both statues and imagery, often as having had angelic wings and holding a sword in her right hand. Beginning as a divine entity, she was later, by her own choice, reborn into a mortal form as the first incarnation of Zelda, making her the true ancestor to the Royal Family of Hyrule and explaining the magical powers passed down within their bloodline.

The Battle Against Demise
When the three gods of old departed from the world that they created, they trusted their ultimate power, the Triforce, to the hands of Hylia so that she could protect it. She did so throughout the Era of the Goddess Hylia until one dark and faithful day, a crack opened up in the earth and the Demon King Demise and his demonic hoards came fourth from the fissure. Wanting to make the world his own, the Demon King gathered an army of monsters and together launched a brutal assault the land simply known as the Surface, murdering the people of the land without hesitation, burning its forests and choking its springs all in their lust the take the Triforce from Her Grace.

In order to prevent the great power from falling into the hands of Demise, Her Grace gathered the surviving humans on an outcrop of earth with the Triforce and sent them skyward, beyond the reach of evil forces wrecking havoc upon the surface world, and beyond even the clouds. After sending her people skyward, the goddess created a cloud barrier to separate the sky from the world below. With the surviving humans safe above the clouds, the goddess and the five tribes who still lived on the surface joined forces and took up war with the demonic hoards that were assaulting the world and sealed away Demise in the former location of the Statue of the Goddess, restoring peace to the land.

The Goddess's Chosen Hero
Hylia, during the long and fierce battle, had suffered grave injuries and knew that the seal would not hold against Demise's immense power. Since Hylia knew that if Demise freed himself it would bring the destruction of the land, she came up with two plans to put an end to the demon king. Her first plan consisted in creating Fi, the spirit that resides in the Goddess Sword, and giving it the purpose of assisting Hylia's chosen hero throughout his journey. Secondly, Hylia decided to abandon her divine powers and immortal form in order to "transfer her soul to the body of a mortal" so that the Triforce, which was created by gods but ultimately not usable by one, could one day be used.

Hylia left several messages for the one who would one day become her chosen hero so as to guide him from the edge of time in his quest. Along with these messages, the goddess prepared several trials that would test the hero's power, wisdom, and courage. After completing each trial, the chosen hero would receive one of the three sacred gifts left by Hylia, which would help the hero find his way to the purifying Sacred Flames. However, to reach these trials, the goddess also left the Isle of Songs solely for her chosen hero. This isle houses three melodies that would open the way to the three trials, with each of the melodies being bestowed upon the hero to play on the Goddess's Harp.

To secure the Triforce from falling into the wrong hands, Hylia hid the sacred relic on Skyloft, within the Sky Keep, but the location was kept a secret for many years. Before passing from the world, the goddess appointed a dragon to protect each region of the Surface: Faron to watch over the woods, Eldin to watch over the mountains, and Lanayru to watch over the desert. Lastly, she appointed the great spirit Levias as warden of the skies. Each of the guardians were left with a part of the "Song of the Hero", a melody that would unlock the final trial for the chosen hero. Hylia entrusted the guardians to teach the chosen hero their part of the song, since should the hero succeed in conquering the last trial, the path to the Triforce will open to him.

The Goddess Reborn
Hylia was eventually reborn on Skyloft as Zelda, daughter of Gaepora and close childhood friend of Link, the one who would go on to become her chosen hero and save her, in the Era of the Sky. However, Zelda was not aware of her previous existence as the goddess until she was tossed out of the sky and into the surface by Ghirahim's tornado, where an old woman rescued her from being captured by evil forces and then helped the young girl remember her original purpose and life as the goddess Hylia. With a young Impa's help, who was actually sent out to help Zelda at the request of the goddess, Zelda set out to pray at the goddess statues located in each temple across the surface to purify her body, with each statue stirring up memories of her past life.

At one point, Zelda and Impa travel through the Gate of Time into a distant past, with Impa destroying the gate so as to escape Ghirahim's grasp, who wishes to use Zelda's soul to resurrect his master. Link, the goddess's chosen hero, manages to activate a second Gate of Time and reaches the era where Hylia has just sealed away Demise. There, Link meets with Zelda, who explains her true nature as the mortal reincarnation of the Goddess Hylia. She blesses the Master Sword with the power of the Goddess, causing it to take on its true form, before telling Link that she, as the reincarnation of Hylia, must remain in a deep sleep to keep Demise imprisoned within his seal. Before doing so, Zelda explains that the goddess needed someone with an "unbreakable spirit" to defeat Demise. However, Hylia realized that spirit alone was not enough, and so the goddess, knowing that the young hero would "throw [himself] headfirst into any danger, without even a moment's doubt" if it meant saving Zelda, used Link so that he would be able to wield the Triforce. Her Grace apologizes for the way she had to involve him in all of it, but is prepared to pay the price for her actions. She proceeds to seal herself into a crystal and sleep for thousands of years to ensure Demise's imprisonment holds, and tells Link that he must find and use the Triforce to destroy Demise so that she will be able to wake up in their own time.

Link succeeds in obtaining the Triforce and wishes for the destruction of Demise. He then rushes into the Sealed Temple to witness Zelda's awakening, but just as the group believes that Link's long journey is finally over, however, Ghirahim appears to attack them, taking Zelda and making for the Gate of Time. Link follows Ghirahim, where he is beginning the ritual to revive Demise, who was still sealed in that era, by having him absorb the soul of Zelda. He has his troops assail Link in absurd numbers to keep the hero at bay while he works, but Link manages to reach the center and fights Ghirahim, successfully defeating him. Ghirahim, however, reveals that while the two were fighting, the ritual continued, and the Imprisoned rises, swallowing Zelda's soul and returning to his original form: the Demon King, Demise.

After Link seals Demise's conciousness within the Master Sword, peace returns to the land, and Zelda as well as the young hero return to their own time. Zelda mentions to Link that she had fantasized about the surface for so long that she wants to remain there and watch over the Triforce, and asks what Link's intentions are for the future. Link smiles at her, and then the camera pans to show both his and Zelda's Loftwings flying back into the sky, implying that Link chose to stay with her.

Legacy
The descendants of the people who lived among Hylia would come to be known as the Hylians and the descendants of her mortal incarnation, Zelda, would go to establish the Kingdom of Hyrule upon the surface in the Era of the Prosperity, becoming the long-lasting Royal Family of Hyrule bloodline and inheriting her sacred powers. Future women born into her royal bloodline would be frequently named after her mortal incarnation for generations, while it would seem Lake Hylia and the Great Bridge of Hylia would be named after her goddess incarnation.

Theory
Demise possesses a sword strikingly similar to the Master Sword. It remains unexplained whether the blade wielded by Her Grace and her chosen hero was specifically created to counteract Demise's weapon or vice versa. This is made further unclear by the fact that Fi and Ghirahim are similar humanoid beings accompanying each sword.