When Bob Mackey previewed The Legend of Zelda: A Link Between Worlds recently, he mentioned that "its story fits neatly into the Zelda timeline," with the caveat that only "folks who personally annotated [their] copies of Hyrule Historia" will actually care.
I get where he's coming from with that remark; having only skimmed through my copy of the book, I have a hard time mustering up any enthusiasm for the continuity of Zelda. I mean, have you actually read up on the series' storyline? After a couple of decades of treating each game as a sort of Joseph Campbell-like "hero of a thousand faces" tale, Nintendo decided to take every Zelda game to date (except the CDi ones and, oddly enough, Link's Crossbow Training) and shove them into a timeline. Granted, Zelda plots have featured connections since the very first sequel. But many of them seemingly contradict one another, so instead of doing the sensible thing and simply hand-waving it all, Nintendo instead decided that the Zelda timeline splits into three separate time lines that diverge at Ocarina of Time. Time travel stories always leave things in a mess, but here we have a story caretaker actually embracing the paradoxes that go hand-in-hand with it rather than dancing around it delicately.
Since A Link Between Worlds serves as a direct sequel to A Link to the Past, it's set in the "Link sucks" branch of continuity. Nintendo decided that Ocarina's time paradox left three possible outcomes, one of which makes you wonder why you played Ocarina of Time at all. In this worst possible outcome, Link loses to Ganondorf, but the Seven Sages defeat him anyway by sealing him and the Triforce into the Golden Land. The Golden Land becomes the Dark World, though Hyrule Historia notes that another name for the Dark World is "the Underworld," which makes it sound like the Nintendo folks who helped put together the book were already thinking ahead to A Link Between Worlds and its secondary realm of "Lorule," the groan-worthily named world beneath Hyrule in that upcoming adventure.
Anyway, the failure plot line led to A Link to the Past, in which the Golden Land had become a hidden universe whose twisted atmosphere could transform would-be heroes into pink bunnies. And now that leads to A Link Between Worlds, which is set in the same Hyrule... though the bunny this time around is a weird masked merchant who takes up residence in Link's cottage. Somehow the hidden kingdom of Lorule plays a part as well, though we can safely assume that A Link Between Worlds takes place before the next games in the "Link's failure" timeline (Oracles of Ages and Oracle of Seasons) and that Lorule isn't the same as Oracle of Ages' subterranean kingdom of Holodrum. Probably.
But does it matter where exactly A Link Between Worlds falls in the Zelda continuity? Aside from its very obvious relationship to A Link to the Past, I have trouble imagining its free-form dungeon forays and new two-dimensional gameplay gimmick (which allows Link to transform into a drawing and sidle along walls) would be materially different regardless of what its relationship to Twilight Princess or The Wind Waker was. If anything, pinning down a fixed timeline only complicates things. Once upon a time, The Legend of Zelda was content to be a series of games in which a kid clad in green saved a princess named Zelda (usually), and aside from a handful of direct sequels none of them really bore any relationship to one another. You'd see nods from time to time, but as vague hints they were open to interpretation and left the story open for the games' creators to approach as they saw fit.
But now that everything's all pinned down, every new Zelda game has to fit into that framework, and its place in the series' lore will inevitably be picked apart and analyzed by critical fans. In Zelda, as in so many other franchises, the concept of continuity threatens to undermine the integrity of individual stories. We see it all the time in other games.
Consider, for example, the Metal Gear series, which wears its mythology like a boulder around its neck. By the time Hideo Kojima got to Metal Gear Solid 4 -- actually the sixth game in the series -- the plotline had grown so baroque that most of MGS4's "resolutions" to the ongoing narrative amounted to vague rationalizations and a testy explanation that "nanomachines did it." Since then, Metal Gear "sequels" have trekked backward in time to fill in gaps that don't really demand explanation, all the while building up details that make the earliest games in the series feel out of place. To Kojima's credit, he's basically said, "Hey, make of all this what you will," but even that feels like a bit of a cop-out in light of the franchise's extensive focus on (and expectation of fan investment in) its running storyline.
Honestly, continuity comes around to undermine practically any long-running game franchise. The Castlevania series more or less explored its timeline as far as it could, which is a major reason the Lords of Shadow series explores an alternate reality. The Mega Man series actually had a rather involved plotline, which proved to be remarkably silly if you actually took the time to read it. Crystal Dynamics has rebooted Tomb Raider twice in the past decade in order to clear out the clutter. At some point, a franchise gets to a point that its abandonment is a mercy, if only to keep it from collapsing under the weight of its accumulated narrative cruft. Only Mario (and to a lesser degree, Sonic) seem to have avoided this trap, which they've accomplished by reveling in the superficiality of their universes.
Certainly games don't have a monopoly on this phenomenon; you can see it in any form of serialized fiction. Remember Lost? The writers had fun building up all those cool mysteries, but eventually they had to come up with explanations for the insanity... few of which lived up to viewer expectations. New Metal Gear leading man Kiefer Sutherland knows the problem well, having starred in the much-decried final seasons of 24. The Star Trek series succumbed in part to the need to maintain consistency within a universe where the stakes and technology constantly escalated, undermining the drama of all but the most outlandish crisis... and when the franchise went back in time to explore a more humble era with the Enterprise series, fans complained about every trivial inconsistency with established lore.
And then there are comic books, the king of this tragic kingdom. In comics, individual writers try to put their own fingerprints on long-running brands, only to have their successors go to great lengths to erase all their efforts. Consider Grant Morrison's run with The New X-Men, in which he took a well-liked original character named Xorn and revealed he had been the X-Men's arch-nemesis Magneto in disguise all along. Magneto ended up dead at the end of Morrison's run, so naturally a later writer came in and revealed Magneto was still alive. The explanation? Magneto wasn't actually posing as Xorn -- rather, Xorn was posing as Magneto posing as Xorn (according to Xorn's twin brother). And we all became a little stupider for having witnessed the whole spectacle. (If you want a good laugh sometime, ask someone to explain Jean Grey's life in 100 words or less.)
Some comic properties have been running for 70 years, with heroes never aging. Comic publishers now feel the need to hit "reset" on their extensive interlocked universes every decade or so, because their stories have begun to implode. If DC didn't do some sort of Crisis every now and then, we'd have a Batman who reads like Christian Bale's version yet who was meant to be the same campy Silver Age Batman who made the '60s TV series look like an exercise in serious-minded restraint by comparison. Characters like The Punisher and the cast of G.I. Joe originally had backstories as Vietnam vets, which made perfect sense in the 1980s. In 2013, however, that would put most of those characters in their 60s or 70s. Luckily for Frank Castle, America is pretty good at maintaining a perpetual state of warfare, so his writers have plenty of choices for retooling him to be a younger character -- but these sort of blasé retoolings can still undo a character's long-term development.
In short, stories have a natural shelf life and need both a beginning and an ending. They cease to be interesting or meaningful once they violate that basic rule of writing. By forcing Zelda's disconnected plots into a larger tapestry, Nintendo puts the series at risk of running itself aground. And if your response to that concern is, "So what? As long as the games are fun, I don't care about the story" -- well, that's the point.