In Zelda II, if you are on the very top of the screen and you turn into a fairy, strange things can happen. In this case, you warp to the top of the beginning of the palace (this happens to be the third one) while partially stuck in the ceiling. If you go down the pit where the elevator normally is, you'll warp to the top inside the elevator. Then, go up, and you'll warp again, stuck (you'll have to press Start, and then press Up+A on the second controller, or press Select+Up if you're playing on a GBA).
I've decided to redo all the Fairy Glitch videos for Zelda II so that they have much better quality so that it is much easier to see what is going on. This is based off my original video on YouTube: http://www.youtube.com/watch?v=aglj2qoYHwM