What is storage?

To understand storage, it helps to understand the event system in Wind Waker.
There are 4 event states that the game can occur in (0-3).

Event 0 is the default, normal gameplay state.
In events 1-3 seem to be very similar, you lose control over Link and enemies and other actors freeze.

While you mess around with storage, its easy to tell what state you're in, just see if enemies or actors are frozen or not.

For the game to end an event, it requires an "end event" flag to get set to force the game to set the event state to 0.

So the question you may be asking is, what happens if you set this "end event" flag when you're already in state 0. As it turns out, this is what storage is.

Basically, there's an additional flag that represents storage. There is no reason for it to be used in normal gameplay. The game never uses this "storage flag" during normal gameplay.. I theorize it was in the game to prevent crashing during testing, or to prevent some overflow error in the event coding.

Essentially if this flag gets set, the next time you activate an event, it will be immediately get set to event 0, allowing you to regain control of Link.

- Expalaing Wind Waker storage with the event system -
Activating the Wind Waker puts Link in event state 3.
You close the Wind Waker 3 frames before Link touches the ground.
The "end event" flag sets the event state 0, but the Wind Waker doesn't get closed properly, so you can close it again.
Setting the "end event" flag while in event state 0 sets the storage flag.
You now have storage