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After the Keyblade War, the Dandelions reside in a datascape of Daybreak Town, with all but the Union leaders made to forget what had happened. In the real world, Ephemer meets with Skuld in the Keyblade Graveyard, revealing that they are two of the new Union leaders selected by Ava. They are met by three others: Ventus, Brain, and Strelitzia's older brother, Lauriam. The five agree to keep the world's destruction a secret and form a single Union, Union Cross, to prevent the past from repeating. Meanwhile, Maleficent encounters an unknown figure who explains that the world she is in is only a data simulation. Refusing to let her stay due to the damage her knowledge of the future could cause, the figure guides her to the tower in Daybreak Town, telling her to use the Ark at its center to return to her time.

Lauriam investigates Strelitzia's disappearance, aided by his fellow party member Elrena, before confronting Maleficent in the tower. Maleficent defeats Lauriam and escapes back to her time, but the Ark is damaged during the fight. Meanwhile, glitchy afterimages of events from before the Keyblade War begin appearing in Daybreak Town. With the player's help, Brain discovers the glitches are an effect of the datascape being forcibly connected to a data world that was never connected to the original Daybreak Town, and that they are now all trapped in the datascape. While searching the Book of Prophecies for a solution, Brain finds the Master's list and discovers that Ventus is not one of the intended Union leaders, suspecting that Ventus was manipulated into replacing Strelitzia.