I always thought that over the years, everyone decided to live on the surface and because of that, Skyloft no longer had a reason to stay up there. I'm guessing it just came down like the one section with the goddess statue and joined the rest of Hyrule. The main part of Skyloft probably became Castle Town in Minish Cap many years later. As for City in the Sky, I always thought it was different from Skyloft. It's more like a technological structure. Given how the Oocca are the oldest race in Hyrule, they probably were up there long before Skyward Sword's backstory, probably hidden from Skyloft. Anyway, the sky areas in the Four Swords trilogy are mostly clouds you can walk on, but then there's a floating structure that's held up the same way as Skyloft. The palace used to belong to the wind tribe, and maybe they created and settled there similar to what their Skyloftian ancestors once did.