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The game presents it on a surface level as time travel but then the moment anything beyond that surface level is actually questioned by anyone besides the Professor (who is now dead), it brings the time travel into question and then goes no further, which is the writers intentionally trying to get you to second-guess the time travel element. The time travel itself is even set up in a way to make you question what it's doing in the first place (the "time machine" is claimed to be sending Pokeballs to the past/future where they then come back with Pokemon inside them - ignoring the logistics of how that works in the first place, how on earth would you verify specifically that they went to the past or future).
Every single use of Tera crystals so far thematically fits the concept of Tera power being the power of manifest dreams/desires/imagination, The Penny quote, but also the entire concept of Tera types in general, the fact multiple different Paradox Pokemon only came into existence after their concepts were imagined (Donphan paradoxes based on a bad photo, Walking Wake and Iron Leaves being originally imagined by an artist, the fact people see their dead relatives at the pool on Oni Mountain, the fact Ogerpons masks embody its memories and gain power based on them. Even if you completely ignore the time travel story and don't question it, and just focus on the Terastal phenomenon, how can it be interpreted as anything but dreams/imagination?
Hell, you literally start every Tera raid battle with an animation of your trainer opening their eyes as if they've just woken up.
