wtf o.O; i dont remember this place in oot...... kewl new area!
That would be the Forest Stage. If you wear various masks while standing there (I presume on the little tile right below Link seen here), you will get various effects. The Skull Mask will get your Deku Stick carrying capacity upgraded by 10, the Mask of Truth will get your Deku Nut carrying capacity upgraded by 10, and the other masks will get one of three random reactions: the Deku Scrubs will leave you Rupees, they will spit Deku Nuts at you, or they will stare at you quizzically.
(BTW: the second Deku Stick upgrade is to be had from a Deku Scrub in the screen beyond the Skull Kid, and the second Deku Nut upgrade is to be had from a Deku Scrub at the bottom of a hole beneath a bombable boulder in the Lost Woods.)