Scrolls left by the Hylian people tell the creation of Hyrule. According to these scrools, three golden goddesses -- Din, Nayru, and Farore -- came from a distant nebula, and descended upon a chaotic land of Hyrule, and there they created order and life. The goddess of power, Din, dyed the mountains red with fire, thus creating land. The goddess of wisdom, Nayru, created science and wizardry, bringing order to nature. Through justice and vigor, the goddess of courage, Farore, created life, from the animals crawling the land to the birds soaring in the sky.
The gods, finishing their work, left. Behind, they left the Triforce, a symbold of their strength.
The NES versions speak of Hyrule as a "little kindom". The legend of Zelda passed down by Impa says Hyrule long ago used to be "one country", and the same instruction booklet (AoL) labels Hyrule as "vast".
"A long, long time ago the World was in an age of Chaos. In the middle of this chaos, in a little kingdom in the land of Hyrule." (LoZ Manual)
"... Link remained in the little kingdom of Hyrule and lent his hand to its restoration." (AoL Manual)
"It is said that long ago, when Hyrule was one country, a great ruler maintained the peace in Hyrule using the Triforce." (Impa, AoL Manual)
"The Triforce of Courage is hidden in the Great Palace in the Valley of Death on the largest island in Hyrule." (Impa, AoL Manual)
"The vast Hyrule is the stage for the Adventure." (AoL Manual)
The Japanese name for Hyrule is "HAIRARU." This is simply "Hyrule" transliterated into katakana. Compare with "HAIRIA" (Hylia).