Inside the Faldar’s Tooth public dungeon. Follow the road going east-northeast, across a river, of Honrich Tower Wayshrine. It will lead you to the fort ruins, where you can find the entrance to the dungeon. The entrance is inside a broken tower, that can be seen through the fort gate.
When you enter the dungeon, turn right. You’ll know you are on the right path when you come in contact with the lorebook “Song of the Askelde Men”. As you go through the first large entrance, you’ll find yourself inside a small room. This is where the shard is hidden.
Dungeon entrance is in the broken tower straight ahead.
Dungeon location on the world map.
Lorebook location and the skyshard in the distance.