Era of the Goddess Hylia

"The old gods created a supreme power that gave anyone who possessed it the ability to shape reality and fulfill any desire. They called it the Triforce. In his thirst to make the world his own, Demise readied a massive army of monsters for war. He sought to take the Triforce for himself by force. The goddess feared for her people. She used her power to send both them and the Triforce into the sky on a slice of earth she cut away from the land. This floating rock became the new home of our people. In time, it came to be known as Skyloft.

After a long and fierce battle, the goddess, Hylia, succeeded in sealing away Demise.

However, soon after the demon king was imprisoned, it became clear that the seal would not hold long against his fearsome power. Hylia had suffered grave injuries in her battle with the demon king. She knew that if he broke free again, there would be no stopping him.

And if the demon king were to free himself, it would mean the end of the world for all beings of this land.

In order to put an end to the demon king, Hylia devised two separate plans and set them both into motion.

First, she created Fi. She made the spirit that resides in your sword to serve a single purpose: to assist her chosen hero on his mission. Her second plan...was to abandon her divine form and transfer her soul to the body of a mortal.

...She made this sacrifice, as you have likely guessed, so that the supreme power created by the old gods could one day be used. For while the supreme power of the Triforce was created by gods, all of its power can never be wielded by one.

Knowing this power was her last and only hope, the goddess gave up her divine powers and her immortal form."

— Zelda