In Mido Town, visit the life-healing lady and magic-refilling lady if you wish. Then head west until you find a church. Use the Jump spell to jump onto the roof of the church, then go into the door up there. The swordsman in this town will teach you the Downward Thrust. Just press down while jumping and you will thrust downward.
In order to get everything that is available in this town, you will need to go get an item and bring it back to town. To do that, exit town, walk west and press A to break the boulder, then keep walking along the path. Once you are past the forest where you found Bagu's Cabin, go north into the swamp. There is a cave blocked with a boulder here, so use the hammer to break it open.
Inside, you find a bridge with Bago-Bagos flying around and some Lowders crawling around. On the next screen, there is an orange Daira and two red Dairas. Beyond them, you will find a jar of red liquid. This is not a magic container. It is a jar of the Water of Life. Someone in Mido Town needs it, so exit the cave and make your way back to town.
In Mido Town, go to the third screen and talk to the old woman in purple. She will let you into the house because you have the Water of Life. Go to the guy downstairs to learn the Fairy spell. This spell turns you into a fairy, allowing you to fly wherever you wish on the screen. The only way to turn back into Link is to exit to a different screen.
Now it's time to head to Midoro Palace in the west. To get there, go west from Mido Town, break the boulder in the path, and then go north. When you see a boulder blocking a cave to the east, go there and break the boulder and go inside. Use the downward thrust to kill the small, spiky Myu, then continue to the right and kill the Lowder and Goriya. In the next room, get the Heart Container, and then go back outside.
There is another cave to the north where you can get a 200 point P-Bag if you wish.
From there, keep going west through the Moruge Swamp until you reach Midoro Palace, also known as the Swamp Palace.