The game's creators have established early on that Legend of Zelda: Skyward Sword is a prequel to Ocarina of Time. Since the latter game was previously accepted as the earliest game in the chronology of the series, this makes Skyward Sword the new beginning of the entire saga; this has been confirmed by the makers themselves near the end of 2011, with the issuing of an official timeline for the series.Skyword Sword expands on the origin story of the series: the three ancient goddesses Din, Farore and Nayru created Hyrule and the three components of the Triforce, and put them into the care of the goddess Hylia. When the Demon king Demise waged a war on Hyrule to obtain the Triforce, Hylia hid the Triforce into a piece of land which she put above the skies together with the Hylians (Skyloft), while evil was destroyed and sealed away on the ground. Hylia herself reincarnated into Zelda, with the purpose to act as the seal that keeps Demise locked away. During the game, Link learns that he is chosen by the Gods to defend the Triforce; to this end, he obtains the Goddess Sword, which is gradually upgraded into the Master Sword known from most other Zelda games. At the end, Demise is beaten by Link, but he vows that his essence will ever remain and perpetually reincarnate, which alludes to the origin of Ganondorf in Ocarina of Time and all of his subsequent rebirths in other games. With evil destroyed for now, Link and Zelda decide to stay in Hyrule; Link restores the Sword to the Sacred Grounds, where centuries later, it can be claimed by his successor in the Temple of Time from Ocarina of Time.
No. This game actually implies at the end what was already suggested in the rest of the series: Link (or whatever name you give the protagonist) is usually a different person in each Zelda game. Most games feature a different hero appointed by the Gods to defeat evil, who is in fact reborn every time. The protagonist could therefore be said to continually 'reincarnate', just like Zelda and Ganon(dorf). There are often centuries and many generations between heroes, so by each new hero, the characters from chronologically earlier games have long since passed away.There are a few exceptions: the Link from Majora's Mask is the same person as Link from Ocarina of Time, since these games directly follow one another. The same goes for the Link from Wind Waker and Phantom Hourglass. Link from The Legend of Zelda is also the same person as Link from The Adventure of Link; and the games A Link to the Past, Oracle of Seasons/Ages and Link's Awakening also feature the same Link.