Where exactly is Termina located? I believe it is a sort of alternate dimension. Which is why a lot of the peole look the same as they do in OOT. Like many have said before, the whole link falling down the hole bit was him getting transported to another dimension.
SPOILERS AHEAD...I think
A joke me and my friend once made when i beat MM, and when the moon went away was something like this.
People in Termina: Yay, the moons gone.
*Moon appears in Hyrule*
People in Hyrule Awwwwwww
I dont know what that had to do with the topic.:eek:
"All that is natural is not right, and all that is unnatural is not wrong"-Me
Anyway , I always saw Termina as something like Wonder Land.
You know , Alice falls down the rabit hole and is suddenly in Wonder Land.
I personally think that it's just an alternate dimension , because like you said , there are so many fimilar faces there.