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Its not imagination nor time travel. Paradox Pokemon are a bunch of robots just like the AI professors. The "time machine" is in fact a robot building machine or something like that. The Paradoxes are robots with their AIs based on the original Pokemon.
>B-but past paradoxes dont look like robots....!
Do the professors?
Im not joking. There's no reason for a pokemon to be able to create life from someone's imagination and time travel theroy (which is the most plausible one) also has a bunch of inconsistencies. Imaginationfags can try to win this by saying "but robots also are a product of imagination" but their whole basis of Terapagos/Ogerpon creating pokemon makes no sense.
Bet this will be revealed in DLC part 2