Pixar’s Lightyear represents the company’s first attempt at a theatrical spinoff, and it’s a few levels deep into its own lore, which has some people scratching their heads. According to IMDB, Lightyear is based on the “real life” inspiration for the Buzz Lightyear character, but the director recently came out and said it might have all spawned from this in-universe movie. Disney may want the audience to interpret it for themselves.
Source: How Lightyear Might Change the Game for Cinema’s Future