This is the global Interstice. For the story arc, see Fantasia Arc.
Fantasia (幻造世界, Maboroshi-zukuri Sekai (Fantajia); literally "Phantom-making World") is the global Interstice created by the Great Roar of the Astral World, wherein the Physical World and Astral World are merged as one. Creatures once believed to only be fantastical manifest in the world of man, many of which prey upon humans and drive them from their lands. As a consequence, large numbers of refugees embark on a mass pilgrimage to Falconia, the sole safe haven in Fantasia where people can live in peace and prosperity.
Fantasia is noted to be an ancient recurrence, as opposed to a new phenomenon; in the chaos of ancient times, the Physical World and Astral World were largely intermingled, with Fantasia being a return to that world state.