This is not natural - two lesbians actually talking things through and sorting out most of their misunderstandings in the space of a single chapter? Surely some eldritch horror from beyond the bounds of reality is going to appear in the next chapter to destroy this comforting scene of harmony and love . . .
The theory I had before was Earth -> Wuxia -> Game.The power of Gex to relieve all the tension, then have proper discussion during Sage Time.
As for the memories, my half-tinfoil theory is this:
The plot of the game was actually something Xiao Yang went through in her past life.
Then after reincarnating on Earth she went on to subconsciously used that for the game's plot, with the heroine replaced by the wuxiaDew because geh.
And her going through wuxia world -> saving Dew in this is just role-reversal.