The Pocket Universe exploded.
The Moon evaporated as an end result to being the physical bubble to this reaction. The moon then technically didn't explode, but an explosion did occur and Link tanked the blast point blank as proof in the video.
Link was expelled to the field from this force. Proof in video.
Moisture already exists in the atmosphere constantly. By your way of thinking, a moon would have to be evaporated and turn into moisture every time you see a rain bow (hahaha omg I'm laughing as I type this at how asinine it sounds)
in conclusion.
Majora became energy and exploded. This force blew-up the miniature dimension. Link was standing next to Majora when this happened. The Moon, acting as a physical bubble, popped. Or simply evaporated/disintegrated from such a forceful blast radius and then the moisture in the normal atmosphere happened to produce a Rain-Bow which was also obviously there for a "happy ending" all is well effect. Link tanked that powerful energy explosion and was expelled down with that force to the fields of Termina.
/bows.
@Wil: I called him Jr as in a reference to one being below another on some sort of age scale, or lower in general by some other ranking in any category. In this case, a understanding of explosions and pocket universes.
and on an almost unrelated side note: do you know how a chain reaction works? Explosions can start at one point and react with other things to create more explosions. But that doesn't matter. The Pocket Universe blew up and contained the explosion. The moon simply was destroyed as a result of the after math. Being it an explosion or not, the moon was destroyed as some forceful blast result, due to sounds of an eruption and obvious physical reaction shown in the video when Majora began to glow and start to blow-up.
But if the moon did explode. It started at the top and reacted down wards. Explosions work in multiple variables and facets. Water molecules in such by the way probably existed in that miniature universe, since there was a grassy field, a tree and Majora, so when all that was obliterated, the molecules of moisture in that atmosphere still existed and produced this Rain-bow effect. Along the obvious factor that rain-bows can appear out of air already, and that it was there for a happy ending game play mechanic. You will constantly pull on that "rainbow" thread. I honestly can't believe how many god damn off railed topics I have to go into to explain to you before we get shit straightened and can start on the actual debate. But, no, I'm done.
You need to learn from what I said. It's all there, it's all common sense and knowledge and you can study it up for yourself and if you find actual proof, word for word quotes form something else to show I have a flaw instead of "lolholes" then please do so. I'm very open to criticism, since I play Competitive Fighting games where people critique you with advice all the time. And that's what I'm doing now. So bone up on some of that, read what I typed carefully please. Don't nit pick stuff. And you and Scream can have a fun time. This feat stands. Pretty wow, idk if Sheik can beat Link now. Except maybe by gimping.