That hole is where the Lunatic Pandora was, at least for a time. Remember Laguna's foray into acting? When he, Kiros and (occasionally) Ward are leaving the Trabia Canyon, he looks into the distance and sees the Crystal Pillar gleaming. I guess that was when Esthar was still experimenting with the Pillar before they sank it. The Pillar generates a huge amount of energy; if that energy lingered, that'd explain why the Garden's controls get messed up whenever Nida tries to fly over the crater.
I remember seeing two missiles get fired to Trabia, maybe one missed?
They fired a whole swag of missiles, but they wouldn't have had the power to cause that much damage to the ground.