I am wary about discussing this theory as there are many others who have put much more thought into it than I have, but I can certainly try with what I was able to find, and corrections are always appreciated :>

(The information in this thread was garnered and combined from these places:
https://numan.tokyo/game/Mptei / https://www.youtube.com/watch?v=dEHOFFHBjck / https://detail.chiebukuro.yahoo.co.jp/qa/question_detail/q10231144430 / https://70okugame.com/twisted-wonderland/kosatsu#c3 )

The basic theory is that everything we know is repeating in a loop in an attempt to either stop something from happening or to make something happen.

The game’s catch copy of “I will show you a true happy ending” (NA: “Let us show you the real happily-ever-after”) could be insinuating that there have already been less than happy endings, and we may have already seen one: while some theorize that the events of the prologue are showing us what is going to happen in the future, others say that it is both that and something that has already happened.

The theory goes that the battle with the chimera (who may or may not be an overblotted Grim) was lost and everyone (or just the prefect) is sent back to try again, thus the opening lines of the game narrated in Crowley’s voice.

(Note: I would have translated this as “I—they—you—only have a little time left. Whatever you do, don’t let go”, but the situation is so vague that anything is possible.)

(Here is a short comic insinuating that this time loop is Crowley’s unique magic (warning: blood, death, a Yuu design) https://www.pixiv.net/artworks/82046021#1 )

This theory seems to be largely inspired by Mickey’s comment that he has seen the same dream three times but he also says “your voice gets clearer and clearer every time.”

Since Mickey also shows up in Books 2 and 3 but we were not able to speak with him, it is possible that this is not actually hinting at two earlier loops, just earlier events within the same timeline. This does not dismiss the time loop theory and might mean that this is Mickey’s first time interacting with the loop, but there have been far more than just two or three timelines.

(This account pretends that Book 7 does not exist yet, so that is about as specific as I can get.)

The theory gets kind of wild with references to STYX’s simulation system, supposed inconsistencies with Ace and Epel, Crowley’s potential connection to STYX, etc, but one thing that everyone seems to agree on is: Leona knows.

Leona is extremely powerful and extremely private.

He has had a number of contracts with Azul who is also a powerful mage, and according to Idia he seems like “the kind of guy who always knows he’s dreaming.”

Yana has confirmed that Idia has a part in Book 7 and, with both him and Leona halfway out of their coffins in promotional art, people are wondering if Leona will be stepping up as well. https://twitter.com/YuuRei20/status/1639005524212719621

(We know that Riddle’s current personality is a 180 degree change --from original plans and that this change was made pretty far into development, after everything had already been approved. https://twitter.com/YuuRei20/status/1626491706081439747

There are also rumors that Leona’s Book 2 was the original Book 6, looking at older promotional information.
It is possible that—much like Riddle’s situation—Yana came up with a better idea than what originally been decided, and it required shoehorning Leona’s drama into an earlier Book in order to make it work.
https://twitter.com/YuuRei20/status/1610011768180584448

This would mean that Book 7 used to have significant space for Leona (there is a pattern of the previous Overblotter having a role in the next Book).

That space may have been rewritten for Idia, but it is also possible that Idia’s role was added separately and a role for Leona remains to some extent, which is why they went out of their way to say that Leona knows when he is in a dream.)

Theories vary from “Leona is 100% aware of what is going on, broke free from the loop and he is the only one getting older as he tries to save the world” to “Leona knows something isn’t right but not exactly what.”

The proof that people usually point to is his comment where he is unsurprised by Grim “always” eating black stones (which he shouldn’t know anything about), but the phrasing is so vague that he could just be making the connection between the stones and a potential blot-risk.

Another scene that is often referenced in the “Leona knows” conversation is this interaction with Jamil, where he accurately predicts Jamil’s attack on Kalim despite how rarely they interact before Book 6.

There are also the three white chess pieces on the chessboard in Leona’s bedroom that seem to correspond to the only three characters in the game with light cosmic magic: a white rook for Rook, a white knight for Silver and a white pawn for Kalim, whom Leona literally refers to as a pawn piece in chess during Tamashima Mina.

Leona also seems suspicious of Crowley, suspects what happened in Book 5 and is able to literally sniff out magic, which we have seen no other character capable of doing.

Leona is very perceptive in general: he is suspicious of Lilia in Spectral Soiree, calls him an old man when no other character outside of Diasomnia knows his true age, is the first to figure out that Malleus is pretending to be possessed and is able to tell when someone becomes injured and is trying to hide it in both Book 6 and an event.

This is not proof that Leona knows what is going on but it may be an argument for why it is likely that he knows more than he is willing to let on.

Some versions of the time loop theory say that the same prefect is being sent back over and over again to try and save everyone (which ties into the game’s opening), while other versions say that this is the prefect’s first time being summoned into a loop that has been going on for a long time without them, in an effort by someone (Crowley?) to change the ending of the story.

While not technically part of the game the Twst novelization seems to support the first pattern while the manga series seems to support the second, with new prefects showing up after the pervious prefect presumably fails.

Knowing Yana it is possible that the game is actually a third, entirely different pattern with the novel and manga exploring alternatives that were considered for the game but not used.

While looking around for different opinions on the loop theory I came across this observation which is not exactly connected but still fascinating:

When child-Idia releases “Subject ROS-3367A,” child-Ortho doesn’t call it a phantom.

He calls it a monster.

If we compare the growling in the prologue to the ROS-monster and tie it into the theory behind the chimera itself, this may be hinting that Grim killed Ortho.