Zelda is in a memory you have from the previous game, Ocarina of Time, Hyrule is not in this, nor is the master sword. I'd like to think of this game as more of the aftermath of what happened in Ocarina of Time, but theories for Majora's Mask may suggest otherwise.And yes, you can escape clock town, you just have to do a few things before you are allowed to. I hope this answers your questions.