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Ambi's Palace is where Queen Ambi resides for the duration of Oracle of Ages. This palace also serves as a mini-dungeon Link must go through to fight Veran who is possessing Nayru. When Link enters the palace through a secret entrance, he must avoid being caught by guards to enter to the second floor, in which the battle takes place.
Southern Exit - Lynna Village
To find the secret tunnel, Link must find and press the 4 switches in each corner of the garden without being caught by the guards patrolling the garden, after Link presses all 4 buttons you can find the tunnel entrance to the right of the garden entrance.
After entering the palace you will find the the stairs to the 2nd floor by going left 1 screen. On the second floor you must go right 2 screens and up 1 to get to the battle.