>>719681237
Lovecraft bullshit. TL;DR version, BS1 and 99% of 2 take place in dreams (the final parts of G and H specifically take place out in reality). BS2 in particular can be somewhat mapped to the West Dreamlands, with DLC 3 ending with you visiting Ulthar (known ingame as Winterbell). Returning to reality is basically what it sounds like, although due to said Lovecraft bullshit reality itself is also technically a dream, specifically Azathoth's which is why Mabel is trying to prevent niggerman prime from waking up and erasing everything as a result.
You can basically consider reality to be the "base" layer, the niggerman gardens we spend most of BS1 and 2 traipsing through are based in dreams, and one of the ways they can apparently get destroyed is when the dreamer wakes up in reality.
Earth in particular got fucked when TCO got fucked and fell to the planet and showered it in its blood, which all happened just before the tea party. This happening is probably why Red says shit is hitting the fan out in reality, with order crumbling and beasts filling the streets, although it's somehow still in a better state than Wonderland is in BS2 according to her.
>>719682702
There's some unique events and bosses that only happen post-madness.