Kingdom Hearts: Melody of Memory's ending revealed some interesting details about Yozora's homeworld. PLEASE NOTE: There are MASSIVE SPOILERS for the game and its ending ahead.
According to the currently unnamed female companion of Yozora's that Sora met in The Final World, this planet's name is "Quadratum," but a powerful memory of Master Xehanort held by Kairi claims that Quadratum doesn't exist in any of the realms Kingdom Hearts has established so far. It's not in the realm of light, darkness, sleep, or in-between. It's apparently a "World of Fiction," and Ansem the Wise believes it exists outside of reality entirely.
Overall, Quadratum sounds a lot like how Square Enix describes Final Fantasy 15's setting. The developer calls it "a fantasy based on reality," as the game's setting is a fictional place that takes elements from the real world. Quadratum follows this same formula. It's modeled after Japan's Shibuya but doesn't actually exist — not in the real world and apparently not in Kingdom Hearts either.
The director of Kingdom Hearts: Melody of Memory, Tetsuya Nomura, has already confirmed that Verum Rex (Quadratum) comes from the unused ideas of his Final Fantasy Versus 13 project, which eventually morphed into Final Fantasy 15. Players can easily see the parallels between the two by comparing old Versus 13 trailers to Kingdom Hearts 3 Re: Mind's endings. It's hard to miss how much Yozara reflects FF15's Noctis.
With all that in mind, it's hard to believe that the many elements Quadratum shares with Final Fantasy doesn't impact the lore of Kingdom Hearts. It's possible that the World of Fiction might be the realm where some of Kingdom Hearts' Final Fantasy characters originate from, along with characters from other Square Enix properties such as The World Ends With You (TWEWY). If that's the case, it would explain quite a few plot threads in the series that don't have answers yet, and set up plot lines for future games to explore.
Cloud and Sephiroth
No one knows where Cloud and Sephiroth are right now. The two fought a climactic battle in the Dark Depths of Radiant Garden in Kingdom Hearts 2 but disappeared at the fight's apex in a flash of light. Sora, Donald, and Goofy witnessed the showdown take place, and the consensus between them is that Cloud and Sephiroth returned to their own world to finish what they started.
What's interesting about this idea is that most Final Fantasy characters come from a world that's original to Kingdom Hearts. For example, every member of the Hollow Bastion Restoration committee hails from Radiant Garden. Wakka, Tidus, and Selphie come from Destiny Islands, and Fuu, Rai, Vivi, and Seifer originate from Twilight Town. Judging by this pattern, if Cloud and Sephiroth aren't from Radiant Garden, they must be from a different world that's still original to Kingdom Hearts. This rules out Olympus Coliseum because it's one of Kingdom Hearts' Disney worlds. Cloud and Sephiroth's presence on it in Kingdom Hearts 1 just means that they can travel to different worlds at will, same as Cid with his Gummi Ship.
It's probably safe to assume that characters like Zack, Tifa, and Auron had the capacity for this as well. In Auron's case, at least, he probably just woke up in Olympus's Underworld after dying. As for Tifa, if her homeworld was Radiant Garden, there's no reason she wouldn't have appeared in Kingdom Hearts 1 or Kindom Hearts 3 Re: Mind. Since her goal is to reunite with Cloud, she likely comes from the same place he and Sephiroth do.
Cloud and Sephiroth certainly don't come from Destiny Islands, and it's highly unlikely they come from Twilight Town. They didn't come from Traverse Town either because it's a world for refugees who survived their homeworlds' destruction. The Land of Departure, Daybreak Town, and Scala ad Caelum are out of the question too because they're hub worlds for Keyblade wielders. That means Cloud and Sephiroth must come from an original world that hasn't debuted yet, like Quadratum, for instance.
The duo wouldn't necessarily be from Quadratum, per se, but if there are other worlds in the World of Fiction, they may come from one of them. However, even if Cloud and Sephiroth don't come from Quadratum specifically, Kingdom Hearts has featured another set of Square Enix-original characters that likely would instead (or with).
The World Ends With You
Just like Cloud and Sephiroth, it's unclear where TWEWY characters come from. According to Joshua in Kingdom Hearts 3D, he brought 3D's featured TWEWY characters to Traverse Town after their original homeworld disappeared. Since TWEWY is like Final Fantasy in that it's another guest-starring Square Enix property, its characters probably follow the same rules, meaning their homeworld in Kingdom Hearts is one original to the game, not Disney-based. Still, like Cloud and Sephiroth, none of the worlds explored in the series so far make sense for the group. Quadratum, on the other hand, does.
Shibuya is the setting of TWEWY, so since Quadratum takes inspiration from the city, it only makes sense that it would be the homeworld of TWEWY characters. Not only that but the Kingdom Hearts adaptation of Shibuya's 109 department store — the one that Sora and Yozora duel on top of — uses the same number change as the one from the TWEWY. In TWEWY, the building displays a 104 sign instead of 109, and the Kingdom Hearts 3 Re: Mind Yozora boss fight stage does the same.
TWEWY has only appeared in one Kingdom Hearts game, and it's been eight years since then. However, there's reason to believe that it will appear in future titles. Square Enix announced a The World Ends With You anime earlier this year, and some of its more recent teases of the franchise suggest that a TWEWY video game sequel might be in development as well. Square Enix missed its chance to capitalize on Final Fantasy 7 Remake's hype in Kingdom Hearts 3 Re: Mind by not including Cloud and Sephiroth, but it's hard to imagine it would make the same mistake again with TWEWY, especially since the property is getting an anime and possible sequel announcement before the next Kingdom Hearts title arrives in 2022.
Kingdom Hearts: Melody of Memory is available now for PS4, Switch, and Xbox One.