The place under the sea is Hyrule. Obvious facts pointing to this is, the place your in where you meet the King is Hyrule Castle. There is a bridge in the back of the castle (Actually the front of the castle) that leads to an inpenatrable wall with the land of Hyrule from the OoT game just with better grapics. Meaning, you are in Hyrule Castle after it was flooded by the goddeses to keep Gannon from returning. The outside of the castle is Castle Town from OoT (Grapics Improved in WW) And because the beggining of MM is in the Lost Woods, and there being no woods in between the castle and the land outside, it thus shows that you are in Hyrule Castle and that is Castle Town, not Termina.