>>1824208
>>1824220
It's a wonder that the Croajiro who brought Meowmere from "a distant land" was able to leave the World Tree/Palpagos Islands' trap in the first place, so I'm inclined to believe spacetime excuses are on the table and would line up with some of what we already know. There's an Isekai Cop who can summon Pizza from thin air on demand, if you can believe it.
I do think it'd be weird for Terraria to be a major factor in Palworld's lore by name, but I wouldn't be bothered if an unusual island's presence was used as a way to expand upon the setting's weird geography. Maybe there'll be journals on those islands and some allusions in palpedia entries, though I'd really like to see more lore delivered well via gameplay and environmental elements.