Even though the spirit soldier identified the location as Hyrule Castle, Midna says that he’s not who she wanted Link to meet. To that, they still need to cross the rooftops to the tower, fighting a bunch of shadowy birds along the way. They finally make their way to the tower, and come across a robed and hooded person looking out through a window. Link growls at the person, to Midna’s amusement. They recognize Midna (and I realized when they said her name that it hadn’t been said until then), and says that she was looking for someone, who turned out to be Link. They bend down to get a closer look at Link, and note the shackle and remaining chain links on his leg. Midna asks them to explain what’s going on to Link, ending by calling them Twilight Princess – so this is Zelda.
Zelda explains that Hyrule has been transformed into a shadowy world by the “king that rules in twilight”; that’s a mouthful, so I’ll just call him Zant [1]. A flashback shows soldiers trying to protect the throne room as shadow beings roll in, but they’re quickly overwhelmed. Zant strolls in, flanked by a couple of shadow beings, and he gives Zelda a choice: surrender or die. Zelda looks around at her soldiers and drops her sword. With Zant in control, twilight covers the lands, and the people of Hyrule turned into spirits, unaware of their condition. She lowers her hood and identifies herself causing Link to startle and nearly throw Midna off his back, heh. Zelda goes on to say the shadow beings have been looking for Midna; Zelda wonders why they’re so interested, but Midna’s not one to provide answers. The more pressing point is that a guard’s going to come soon, so Midna and Link need to get gone if they want to have any chance of fighting back against this.
Once they’re out of the tower, Midna offers to send Link back home, but reminds him that he got into this mess because he wanted to save Colin and Ilia. She’s willing to help if Link obeys her, and sends him home to think about it. Link appears back in the spring, still in wolf form, which Midna contacts him to say is going to last for a while yet. As Link leaves the spring, Link’s shadow separates from him and forms into Midna. Midna says that Link’s not going to be able to save his friends without her help, because passing through the wall means he’d be back in the twilight realm, and he’d need the help of someone from the Twilight to help him – someone like her. She asks him to find her a sword and shield, then pops back into Link’s shadow.
Link fights a few Bokoblins as he heads into the village, and as he’s about to leave the area with his house, a squirrel calls to him. Wolf Link can talk to animals, which the squirrel encourages him to do if he needs hints. Oh, and it’s not just Colin and Ilia that are gone – it seems Beth, Talo, and Malo are, too, and Rusl got hurt looking for them. Link overhears the mayor and Talo’s father talking about the mayor going out to look for the kids, and mentioning borrowing a shield from Talo’s father, and the sword Link was supposed to deliver to Hyrule from Rusl.
Midna points out an open window above the water wheel Link could go in to find the shield, but as Link looks for a way in, he’s spotted by Beth’s father, who summons hawks to send after Link. Sera’s cat suggests Link hop up on the roofs to get close and scare him. With Midna’s help, he does exactly that, then jumps over to the water wheel and into the storage loft where the shield is displayed on a wall. Link knocks it off and claims it, then jumps out the window. The sword is easier: there’s a spot near Rusl’s house where Link can dig underneath to enter the house; he finds the sword sitting on the couch. With sword and shield, Midna’s ready to help.
As Link passes the Ordon spring, a voice calls from the spring for Link to come. As Link enters the spring, a circle of pillars appears around it, a portal opens in the sky, and a shadow being approaches. Link defeats the shadow being, causing the spring to be filled with light. The light assumes the form of a goat, and introduces itself as Ordona, one of four light spirits. Link stopped the shadow being from taking its light, but the other three spirits weren’t so lucky, which has caused the twilight to spread throughout Hyrule, and if not stopped, the whole world. So, Ordona gives Link his quest: restore the other three light spirits. It also says that Link might be able to return to human form by restoring the spirit of Faron Woods.
Next: A Link from the past.
[1] There could be some misdirection here; the "king who rules in twilight" may be someone else who remains offscreen and Zant's just a messenger/puppet/lieutenant, but until otherwise proven I’ll assume they're the same person. That wouldn't necessarily rule out him being a messenger/puppet/lieutenant for someone else.