Thanks, Bender. :)
Yep, the big grave is the entrance to Level 3. That green orb is Farore's Wind, which brings you back to the beginning of the dungeon/overworld (no different than "F6 -> Continue"). However, the red orb (Din's Fire, an attack item) and the blue orb (Nayru's Love, a defensive item) are much more useful and handy.