That's because Gensou Town is a sort of mirror world, looking similar to the Outside World but actually reversed.

Originally, this world was a place totally disconnected from anything that "exists" (is alive)

It's a world where those who have 'finished their duty', so to speak, end up.

Finished their duty....

It's like a near-death experience....

No no! This isn't the afterlife!

Something having fulfilled its duty

Means it no longer has any reason to exist in the outside world.