In the theory, Terapagos grants people's wishes and supposedly the paradox Pokemon were all created by Terapagos using its wish granting powers when other characters thought of them.
It's a really dumb convoluted theory that only adds plotholes for a game meant for children. It got popular because a Poketuber made a video on it as a quick cash grab without asking why the Prof of the game wouldn't somehow know their time machine was an imagination machine. Because it's somehow easier to explain that than Sandy shocks having screws in its face in a game series where animals/monsters have manmade parts they evolved into having.
Not to mention ignoring how advertisements, merch, external media, and the game itself says its time travel. And no, the DLC1 ads said "Folktales claim Ogerpon is evil" which isn't a lie as ingame folktales do say Ogerpon is evil.