Several enigmatic components of Mother 3 include the Magypsies, the Dark Dragon which they guard, and the setting in which they all reside, the Nowhere Islands. This theory will explain some of my own personal ideas on their possible backgrounds…

From Leder’s speech, we can extract the information that the Dragon once lived harmoniously with humans a very long time ago in the Nowhere Islands. However, at some point, the humans and the Dragon could no longer coexist, so the Dragon was put to sleep by the ancestors of the Magypsy people. But what became of the Nowhere Islands after the Dragon, the very foundation of its existence, was put to sleep? My theory is that the original, physical Nowhere Islands disappeared, as did its ancient inhabitants (save for the ones who put the Dragon to sleep, who took the roles of the Magypsies). Maybe the White Ship did not lead those on-board to the actual Nowhere Islands, but rather to the realistic mirage that is _the sleeping Dragon’s Magicant_. This explains why the Nowhere Islands “remained” after the world ended, because they are simply a world created by the sleeping Dragon’s mind. This also explains why they’re called the Nowhere Islands; they literally are, in the physical world, nowhere!

This realm became intertwined with the rest of the Earth and became very much like reality, much like Queen Mary’s Magicant did. The Magypsies are the beings that have guarded this world for generations by protecting the Needles. When these Needles are pulled, the Dragon awakens, and the world is reborn. Perhaps the Magypsies knew that when the White Ship has arrived, the time for the Dragon to awaken has come as well, for the Dragon must now lend the world its “true power.” But then, what would become of the Nowhere Islands which Lucas calls home? If it is indeed a Magicant, then it would surely disappear, as they have done before in the past EarthBound games. But maybe the physical world would then return, reborn anew for the better…

-AmateurGamer

My theory is that the Magypsies have been on the Nowhere Islands as long as they've been in existence. It's possible that when the Dark Dragon created the islands (I don't recall if that's how things went but I'll roll with it for now), it created the Magypsies and granted them each a needle to watch over, in which they sealed it away until its power was once again needed. I think that without the Magypsies, the Nowhere Islands would be in a state of disarray, so they were created with the purpose of making sure things stayed peaceful. This could've happened hundreds of thousands of years before the events of Mother 3, as it's mentioned that they live as long as the needles stay in their place, so the needles have been there just as long as they have.

- Arfy