- Just a quick note, I'm Hero Forever, but I'm also known as EmeraldX2 on reddit.
In the Animal Crossing games, you, the player character, are actually dead. You are "driven" to purgatory by car or train, depending on the game. Now, many people regard purgatory as a place of punishment, but many others understand it as a sort of "waiting room" a soul stays in before entering Heaven. It is the second interpretation that your character resides in.
You enter a "town" that is populated with cute, humanoid, talking animals. This seems perfect for your character, a small child; the perfect environment to keep you calm and relaxed. Your character is, clearly, unaware that they have died, and this is something your own personal purgatory seeks to hide from you. Why? Because your character is not in Heaven yet, and isn't safe from suffering heartache and other traumas from the knowledge that they have passed on.
Now, while your character is clearly in some kind of flowery haze, (he or she doesn't question how or why there are talking humanoid animals), your purgatory knows that you are still able to discover that you have died, and thus, it does everything in its power to distract you. You're given your own house, you're able to collect money to shop at a department store that grows with time, you can dig up fossils and donate them to a museum...the list goes on. Everything is designed to keep you from getting bored.
And you can never leave the town. This is because you, obviously, can never come back to life. Now, you can get on the train and travel to a friend's town, but the town you arrive in is almost exactly the same as your own. You are still in purgatory, it may just look different. When you seek to visit another town, your own purgatory realizes that you are becoming bored with your own. Thus, it creates another version of itself with enough differences in it to keep you entertained. It also wants you to think you have the freedom to leave, even though you don't.
When your character will be able to enter Heaven is unknown, but in Animal Crossing: New Leaf, it is possible that your character will be able to ascend into paradise once the town tree reaches its full growth stage.