Guiltythree
Next working theory, the world of the dream realm was what they call the moon now. The moon eventually succumbed to the nightmares after their release from the spire (and possibly other sealed areas) after it was unsealed and is the resting place for the Unknown creatures. Thus why space is off-limits (according to Jet) and why the first appearance of the Nightmare began when people started settling on the moon. It would also explain the link that this world has to the dream realm, cuz they were originally from the moon and migrated to Earth when the moon (their old world) was devastated.