Buddhaghosa explains that the Makuṭabandhana was a Hall in which the Malla chiefs put on their ornaments on festival days. It was called a cetiya because it was decorated (cittakatthena pan’esa cetiyaṃ).¹
¹ DA.ii.596; see also Dvy. 201. Hiouen Thsang’s description (Beal, op.cit., ii.37) of the stūpa erected at what is evidently Makuṭabandhana suggests a different explanation. It was there that the Mallā laid aside their diamond maces (? makuṭa) and fell prostrate on the ground with grief at the Buddha’s death.