@SherryShaw,
I seriously doubt that "Selectmytutor" is a native speaker of English. His answer is both incorrect and incomplete.
"Lala land" is used to denote an unrealistic attitude on the part of the person toward whom the expression is used, and it is almost always delivered sarcastically. Here are a couple of examples:
Bob: I really want to go out with Sue, she's so beautiful, so intelligent.
Jim: Listen, Bob, i'm your friend, so although i hate to say this, you need to face up to reality. She doesn't respond to your texts, when you call her to speak to her, she doesn't return your calls, she ignores you whenever we see her--the other day when we went into the coffee shop, she got up and left.
Bob: But if i could just talk to her, i know she would understand.
Jim: Right, you're living in Lala land.
**************************************
Jack: Man, i just saw Bob, and he's really pissed off at you.
Jim: That's because i told him Sue is not interested in him.
Jack: He said if he could just talk to her, she'd understand how he feels.
Jim: And I told him he's living in Lala land.
Lala land means someone has an unrealistic attitude. It may mean someone who is living in their own little world, but that is misleading, it specifically means someone who has an unrealistic attitude toward some aspect of the world in which we all live.