The caged island is located close to the floating platforms near the top of the fortress, but accessing it is definitely annoying and a bit troublesome. The intended way to do this star is by climbing the tree near the beginning of the level, which will spawn an owl named Hoot. You can jump onto Hoot and it will carry you high into the sky. The problem with using the owl is that the camera is even more bothersome than usual, so maneuvering the owl to be above the cage might take a few tries. One tip to help out with this is to keep track of Mario’s shadow, especially once you get over the caged island. Of course, the caged island is really small, so you don’t have a ton of room for error in dropping into it and getting the star.
The other method of getting this star might take a little trial and error, but it is much more reliable than depending on the owl. Head on over to the cannon and look at the coins that are floating in the air by the rotating bridge. You should be able to actually see the caged island in the distance, so line up the cannon’s reticles vertically with it. At this point, you just need to adjust your aim so you will blast right into the cage. You will want to aim above the coins, until the Red Coin is just barely in view. Once you have it like that, then blast Mario and he should land in the cage, netting you another star.