A stands at the bottom of a 1 square dry well. B flies into the well. A dispels B's fly spell. B falls on A. Both are Size M.
They cannot share space. A and B have no standard action left and cannot start a grapple. None of them is helpless. There is no room to step aside. The DM (me) starts to cry.
There are some rules for similarly sized creatures occupying the same space.Squeezing rules state that a character can occupy a space half as large as their normal size (2sq for a large creature, 1/2 sq for a medium creature). While these are rules for exploration rather than combat, the statistical effects (-4 AC/Atk) seem to work well to simulate the issues of operating in the cramped space.
If B was using the Fly spell, when it is dispelled they float down slowly, and are stated to "land safely".
Should the spell duration expire while the subject is still aloft, the magic fails slowly. The subject floats downward 60 feet per round for 1d6 rounds. If it reaches the ground in that amount of time, it lands safely. If not, it falls the rest of the distance, taking 1d6 points of damage per 10 feet of fall. Since dispelling a spell effectively ends it, the subject also descends in this way if the fly spell is dispelled,
-- d20SRD
This would appear to indicate that they would not automatically land prone. Though this would be up to you as the DM. B is still in control of their limbs while falling slowly, allowing some amount of twisting around and positioning, especially since they have two adjacent walls to use.
Personally I would grant A an attack of opportunity, as B is forcibly entering their space (via gravity), but end the round with both if them squeezing in the same space.
Rules as written:
Let us look at what will happen, step by step as that should help understanding what is going on.
Ending Your Movement: You can’t end your movement in the same square as another creature unless it is helpless.
B did not take any move action, it happens outside of his turn. Therefore, the above ruling does not apply to step 2.
The character is on the ground. An attacker who is prone has a –4 penalty on melee attack rolls and cannot use a ranged weapon (except for a crossbow). A defender who is prone gains a +4 bonus to Armor Class against ranged attacks, but takes a –4 penalty to AC against melee attacks.
Summary
B ends up prone on the ground and can not move from there by normal means. Therefore, B probably has to continue the fight from a prone position.
Alternative house rule
In the event that you do not want B to be rather limited, there is a 'common' house ruling that I have seen applied at several of the tables that I have played at. The house rule states that if there are no options available to move to, two characters can share a space by using the squeezing mechanic.
A creature falls into the space of another creature.
In your description, A dispel's (let's say, with an anti-magic field), so it's A's turn. During A's turn, B falls. This is not B "ending B's movement". Falling is not movement, per se, and thus the rule about where you can end your movement covers your choice of movement. In the case of falling, you land wherever the DM tells you that you landed.
Great Question.
They cannot share space.
While it is true that
Two creatures less than two size categories apart cannot occupy the same spaces in combat except under special circumstances (for example, when grappling, riding a mount, or if one is unconscious or dead).
Multiple medium creatures can occupy the same same square, they just can't fight effectively doing so and can't choose to end their movement (in combat) in an occupied square (other than a handful of specific exceptions; grappling, falling prone after a failed Bull Rush or Overrun).
However, there isn't any direct guidance for multiple creatures occupying the same square while fighting. The rules try hard to prevent this from happening, but certainly circumstances may lead to it, like the one you describe.
When this situation has occurred in games I've run, where both creatures are occupying the same square at the start of the next turn, I've always used squeezing, as it seems the most appropriate;
while squeezed in a narrow space you take a -4 penalty on attack rolls and a -4 penalty to AC
Although there's nothing in the rules indicating you are prone after a fall, it's a reasonable DM ruling and one could argue that's what "fall" means. It would be a bit unfair for a creature untrained in Jump to fall prone after an intentional jump, but then be standing after an accidental fall.
If neither creature is helpless but one is prone (but not dead or unconscious), squeezing would still apply, but so would any modifiers for prone
An attacker who is prone has a -4 penalty on melee attack rolls and cannot use a ranged weapon (except for a crossbow). A defender who is prone gains a +4 bonus to Armor Class against ranged attacks, but takes a -4 penalty to AC against melee attacks.
If a prone creature stands up, they are taking a move action, but not moving any distance, so the rule about being unable to end your movement in an occupied square would not apply. (This would be like erroneously restricting a player from taking a 5-foot-step if they had picked up an item or opened a door, since these are move actions that don't actually involve moving any distance.)
