Someone on Neogaf came up with a good theory on where the Fail timeline comes from. In the regular, non-Master Quest version of OoT, you can beat the game only going back in time once, to do the Bottom of the Well and the thing in the Shadow Temple (I still haven't beaten OoT, so I don't know). So let's say that canonically, Link only went back in time that one time, and that created a Back to the Future-style branch. So it's not just a "what-if" hypothetical thing that you could have after any game, it's an actual timeline split (True, you can make Link go back in time as many times as you want, but you can also make him constantly attack Cuccos, or stand and stare at Sheik's crotch for hours, or keep telling the Deku Tree "no" so many times that the disease should have spread and killed him already, or whatever).
So in the normal, unaltered timeline, Link opens the Door of Time and falls asleep, Ganon takes over, then Link wakes up seven years later and makes some progress, but ultimately comes across an insurmountable obstacle in the Shadow Temple, and from that day on, he is never seen again. The Royal Knights of Hyrule then step in and fight the Imprisoning War, sealing Ganon away the hard way.
This also means there is only one Hero of Time. There's not the one that's successful and then the hypothetical one that dies in some random dungeon. Just one, in the Child timeline, who doesn't die until after MM (and actually, at some point after getting out of Termina, he apparently became a Stalfos as a result of going into the Lost Woods (as good an idea as any for why the Hero's Shade in TP looks the way he does)).
I don't know if this is specifically what Nintendo was intending, but the more I think about it, the more it makes sense. I mean, really, how else do LttP and OoT make sense together? Besides, a three-way split timeline is a nice thematic touch. The timeline is gonna have to be a little kludgy considering that they weren't planning on any of it until maybe LttP at the very earliest, but I think they did a good job of working everything in.
The guy in the video kinda makes a good point asking how the Fail timeline and the Adult timeline end up different when neither of them has a hero, but presumably there was some difference in the kind of seal that the Knights made and the seal that Link made (maybe the Seven Wise Men actually aren't the same as the Seven Sages?), or maybe the Knights were just better trained and disciplined after the Imprisoning War, and while the Link from LttP may have still been born in the Adult timeline, he wouldn't have come from a line of Knights because the Knights didn't really exist -- with no Imprisoning War, and just Link running around and doing everything, they never needed to gear up to fight Ganon, and then they figured they didn't need to because Ganon got sealed away by the goddesses and the Triforce and the destined hero and whatever and now they've got their happy fairy tale ending with pretty much no one dying, whereas in the Fail timeline, they sealed Ganon away themselves, in a gritty struggle involving lots of casualties, and probably wouldn't trust the sealing as much as if it had been done by the goddesses' chosen ones, so they'd've been more vigilant.
Holy crap, that was all one sentence. Let me try again.
The guy in the video does make a good point in asking why there's a difference between the Fail timeline and the Adult timeline, when both end up with a world where Ganon is sealed, and then is unsealed with no hero around to stop him. I think, though, that he fails to take into account the differences between the timelines. In the Fail timeline, Ganon was sealed by the Knights of Hyrule following the Imprisoning War, a much more protracted, gritty struggle than the Adult timeline, where some kid goes around and does it all with magic and no one dies. The Fail timeline would have a more regimented and more vigilant order of Knights, as they knew firsthand that the fate of the kingdom rested directly on their shoulders, and many of them probably doubted the strength of the seal they were able to kludge together. The Adult timeline, on the other hand, would have more complacent Knights, believing that the goddesses's seal would hold fast for all time, and that if it didn't, fate was on their side -- the struggle against evil would come down to a showdown between Ganon and the goddesses's chosen hero (who they never saw again, but didn't know was irretrievably gone, which would, over time, raise him to the status of immortal legendary messiah figure), not a war between Ganon's troops and King Daphnes's troops.
While the Link from LttP may still have been born in this timeline, he at least would not have come from a line of Knights, as the Knights would not have lasted that long after OoT without an Imprisoning War. Even with the Imprisoning War in their past, the Knights had all but died out by the time of LttP, so coming instead from a timeline where their services had not been needed since the Civil War was settled, they definitely would not have been around. Further, we do not know the origins of LttP Link's parents -- it is likely that somewhere along the line, his ancestry relied on something in the Fail timeline that was not in the Adult timeline (for example, one of his ancestors might be a woman from a far-off country who married a Knight, while in the Adult timeline, either the Knights were not around at that time (so that guy had no reason to go to that country), or that country did not exist (maybe it was formed by refugees who left Hyrule during the Imprisoning War), or something like that).
That's more like it.
I still kinda wish Link didn't have a hat in SS. I'm okay with the alternate origin for the rest of the clothes, though -- The Kikwis probably evolved into the Kokiri (or they evolved into Koroks and were given the Kokiri form by the Deku Tree and/or the fairies), so once they started wearing clothes, they apparently decided to wear clothes reminiscent of the legendary hero from the sky who found them a place to live centuries ago.