Note: Remember that 4e has a set of rather simplified, abstract rules to cover only situations that come up often. For such rare occurences the GM needs to improvise and make up something new based on the ruleset. With that in mind you can read below.
As Colin said the creature falling would certainly take the regular amount of damage. As for the other one, creatures generally don't occupy 100% of their grid space. That is quite apparent since realistically you can fit a few average people in a 5x5 feet square. So, it wouldn't be a certain hit on the creature under the falling one.
I think you should roll something versus the Reflex of the creature-standing-below or have it make a Dexterity check to dodge the falling object/creature. Relevant size between that creature and the one falling should affect the DC/roll as well, since dodging a halfling should be easier than dodging an Adult Dragon that somehow ended falling from a few feet above your head.
For instance:
Dexterity DC for target to dodge creature/object falling on it = 15
+5 DC for every size category over the creature below
-5 DC for every size category under the creature below
Something similar can be done if you want to roll vs. Reflex instead of having the target roll a Dexterity check.
Regarding damage in case of a direct hit, there are two variables to consider, mass of the falling object and falling distance (momentum gained from greater height would make the impact more intense, just like it works for the falling damage).
For damage due to mass you can either set an amount of damage per weight unit (lb) or creature size category, the latter aiming towards simplicity (eg 1d10 per size category over Tiny, or 1d10 per 100 lbs).
For the falling distance, you should should set an amount per square fallen, or even use the formula for falling damage.
In a more realistic sense, I think I would like to use some sort of multiplication between these two factors however that would be easier to keep balanced and would take a few skills in maths and differential analysis to make sure you don't go "unreasonably off the chart".
All in all, you need to make up something. Good luck with that.
At the the DM’s discretion, an impenitent paladin might be
forced to abandon this class and adopt another, or perhaps
to take the Oathbreaker paladin option
I read this as an out-of-character game rule: if your paladin falls, that is, your DM forces you to abandon the paladin class,1 you are required, as a player, to choose either Oathbreaker or some new class for your character. Oathbreaker’s placement in the DMG implies that this option is explicitly available only if your DM offers it.
Either way, you definitely do not have the option of remaining as a (non-Oathbreaker) paladin after you have fallen. You “lose” your powers, of course, since you are no longer a (non-Oathbreaker) paladin, but they are immediately replaced by those of Oathbreaker or your new class, as appropriate.
And when you fall, you are not abandoned by your deity, so much as you have already been abandoned and that is why you have fallen.
- As with previous editions (which were far worse about this), I strongly recommend that the narrative for how, when, and why a paladin falls should be worked out between the DM and player to maximize its effect and significance, and limit arguments and hurt feelings over differing definitions and expectations for what “good” entails. 5e does massively improve this process by making it less about morality, and more about keeping a specific oath, and by ensuring the paladin can continue to contribute and play in the game on a metagame level by replacing his powers, but I still consider it important that a fall be done in concert with the player, rather than unilaterally as the rules suggest.
Best Answer
Exactly that happens — a vial of acid falls from the sky
A DM does not need game mechanics to describe the environment. When a vial of acid falls from the sky, the DM says "A vial of acid falls from the sky. Boom! It shatters to hundreds of glass pieces, splattering the surroundings with acid". That's all. You don't need rules nor rulings just for describing things.
Questions arise when we need adjudication. For instance, the vial of acid is a part of a trap, which a PC has triggered. Players don't want their character to be splattered with acid, so they expect some kind of roll or any kind of countermeasure, in order to feel the situation was fair:
«You hear a subtle "click", it might be a trap! Roll a Dexterity saving throw... Success! A vial of acid falls from the chimney up above. Because of the height, it takes a couple of seconds, so you've managed to jump out right before it hits the ground.»
The DMG explicitly describes dice as a DM's tool, which she can use, but doesn't have to:
The 3rd edition of D&D was trying to address every possible case in the rules, but apparently this didn't work well. The 5e returns to the "rulings over rules" principle from the 2nd edition.
The rules don't describe everything. It's just a toolset, which a DM can (but not have to) use for making adjudication. The DMG explicitly expects this from the DM (Part 3, Master of Rules):
Tasha's Cauldron of Everything stresses this once more (see page 4, "The DM Adjudicates the Rules"):
So how do we figure out the outcome?
5e is not a physics simulator. Playing D&D is "an exercise in collaborative creation", as the PHB says. "A player triggers a trap with an acid vial attached" and "a vial falls from the sky somewhere" are two very different situations, which require different adjudications. The method of determining the outcome depends on what the situation is: