It's a theory because it is widely accepted as fact with some people not agreeing with it.
The theory is in the title, and evidence to that is the Mask salesman was seen in a cut scene being ambushed in the same forest Link was in before he fell into the hole.
If that hole was indeed in the Lost Woods, Salesman man would have been stalfoed (coined). Another thing to take into consideration is that he seems to be pretty deep in the woods, suggesting he had been without a fairy for some time while wandering (or walking to). Link too, was without a fairy. And from what some say he was to be turned into a skull kid. Some of the same people who believe that the woods Link was in at the time was the Lost Woods also believe link returned though there, becoming stalfo and then again becomes Hero's Shade (I'm not for the Hero's Shade theory, just worth mentioning).
The theory is in the title, and evidence to that is the Mask salesman was seen in a cut scene being ambushed in the same forest Link was in before he fell into the hole.
If that hole was indeed in the Lost Woods, Salesman man would have been stalfoed (coined). Another thing to take into consideration is that he seems to be pretty deep in the woods, suggesting he had been without a fairy for some time while wandering (or walking to). Link too, was without a fairy. And from what some say he was to be turned into a skull kid. Some of the same people who believe that the woods Link was in at the time was the Lost Woods also believe link returned though there, becoming stalfo and then again becomes Hero's Shade (I'm not for the Hero's Shade theory, just worth mentioning).