If I had to guess, I'd say it's closer to a Simulated Universe than Penacony. We're physically here. The power gained from our participation in their "game" is what sustains this place as a habitable environment, so it's simultaneously "real" but not, since it's unstable. This place has longstanding guests, but that wasn't enough. And judging from what happened a month ago, it still isn't enough.

To that end, this place has the ability to draw in more guests. Unless all everyone is lying, they've been pulled from various dimensions and worlds across time and space. Not only have items been taken, but some guests have claimed their abilities have been suppressed. Guests can purchase full use of their abilities using chips earned from Game 52.

A stellaron disaster can corrupt an existing environment and its residents, which could explain the mental and physical effects people experience here, but my understanding is that stellaron corruption isn't usually temporary.

However a force that can draw people from other dimensions, across time and space; suppress or reinstate abilities; and grant abilities to those who have none sounds a lot like an Aeon. It's a better fit for the "how" and "why" of this place.

Not that I can prove any of it.