The 'Distorted Reality', which is a version of the 'Reality' that was a residual effect of the Reality moving to the Lost World's reality from out of its own, was the first known 'Alternate Reality Village'. Though each Reality Village might have harbored a 'A Mental Mind' plane within the Portals, -- which was canonically discovered to be Khrona's own mind shaping much of the Reality they existed in -- it may not have always remained, or even been Khrona's... Or even been there at all. Such was the power of the Alternate Realities.
However in the Distorted Reality, the remnant of that was left behind as an imprint of the Distorted Reality's originality as the first Alternate Reality, the powers of the Mental Mind which was confirmed to be the original Khrona's bore seniority over all copies, and the Distorted Reality could never be superseded as the original Alternate Reality of the Reality. Khrona had done this long ago, but it was only relevant right now, as the Alternate Realities were extended into -- all of which would be after the Distorted Reality, even if they began before the Distorted Reality ever got created.
With that said, the Distorted Reality that does exist as the original Alternate Reality of the Reality still ended up inhabiting the same reality as the Lost World... But this time, inversely. You see, the original Lost World was destroyed by Khrona Tensei -- the entire dimension is decimated, and the only remains are crystallized in the Veritas as a trophy and a memory. Before this happened, the Lost World branched off into its own alternate reality, and it is canon that some of them recall Khrona Tensei from the first reality that they all existed in, making it canonical in both storylines.
The most important part about why this functions is because the Distorted Reality existed before the secondary reality that the 'Neo Lost World', as Khrona calls it sometimes, had gotten into. Considering that their new dimension was already made for them before they crossed over, and the Distorted Reality existed prior to that event, the Distorted Reality left behind by the original Reality is where the Neo Lost World exists, and unlike when the Reality transitioned to their reality and rested there, they suffered the inverse effect where they traveled into the next canonical reality parallel to them -- that belonged to the Distorted Reality. Thus, the tables had turned, and the Neo Lost World existed in the Distorted Reality, inversely to how the Original Reality existed in the Lost World.
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