How would you approach a story within TS2 where someone (seems like it's usually a child in literature of this sort, though it doesn't have to be) finds themselves transported to a different, fantastical world like you see in The Chronicles of Narnia or Alice's Adventures in Wonderland, and actually finds a life there? And just as important (or maybe even more so), how would you play that Sim's story if they were eventually returned to the "real" world after an extended stay in their otherworld? (I just started Seanan McGuire's Wayward Children series of books that deals with the inevitable PTSD and isatiable desire to return to the place that had become "home" for these children after they were returned to the "real" world, and I love them so much that I can't get the idea out of my head, so I'm curious how you'd approach such a story with your Sims if you chose to play it!)

Forgive me because what I imagine would be cc-rich but I would imagine that the life in this fantasy world would be set apart from real world in some way so the sims would be dressed in non-modern clothes (be that futuristic, victorian, maybe a mix of victorian with futuristic goggles, steampunk, etc) or they could have different features (multi color skin, eyes, colorful hair, etc)

If the sim that wandered to there was a young lad/lass there and returned when they were older, I would age them back to how they were (like Narnia) and they'd always be wondering if it were all a dream. They'd tell their friends from the real world about the friends and adventures they had in the other world and either the friends would think they are crazy or just really good at making things up. This would despair the wanderer MC - and it would be frustrating to them because they reached an older age in the fantasy world and so have all these more mature feelings and life events they have already experienced and feel a bit trapped. Maybe there is ONE sim from the real world that believes the MC Sim (and everyone else thinks this are crazy but MC is just happy someone takes them seriously) this other sim thinks that it's real and they encourage them to look for a way back into the world. they even help them because they BELIEVE, darn it!

Then it's revealed that this person ALSO had visited the fantastical world when they were a kid.Maybe do some flashbacks of this other sim aged up, interacting with the life in the other world, yadda yadda. And together they DO find it, when they enter they are the ages are when they left the other world. Sim blender would be used a lot for teleportation and aging. Gussy up mod for quick clothes changes.

I don't know if that's what you are looking for at all, but it was a fun thought experiment.

If it was me, I'd probably start out writing a test chapter or some kind of overview of the story, or getting down the main ideas, to have something to work from. If I needed some inspiration, I'd maybe do a bit of research into similar stories (maybe looking for different approaches to do similar kind of stories, and maybe looking for an approach that hasn't already been overused). If I was unsure of the look of the characters I'd perhaps play around in CAS or build mode to see what kind of style I wanted to aim for, maybe even make a test lot if I needed inspiration for the buildings (I kind of struggle with imagining faces and buildings and such "from scratch" so Sims is a very helpful tool for me...). I guess it depends what works to give you inspiration. You kind of need to figure out what you want to do, and then have something to work from before you move on, or ideas like this tend to fade away into nothing (speaking from experience... :/ )

Maybe make the two styles enough distinct from each other so you get the idea that it's real world and fantasy/dream world, but at the same time don't make it too difficult for yourself CC-wise, so you can find/make what you need without spending way too much time collecting everything. Doing something unexpected could be fun, or you could play around and mix various ideas. "Alice in the Wormhole with Aliens", or "Brooms, Witches and Wizards in the Wardrobe" could let you play with ideas, genres and/or inspiration from books, but do your own twists and not at all follow the "expected" storylines.

In TS2 it's fairly easy to do distinct styles, because you can create separate lots, or even separate hoods with vastly different lots/sims if you need that, and not be worried about the items being visible from lot view. If you want a "fantastical" look to the neighborhood you can even do that easily.

Other than that, I guess it depends on which format you prefer - text and pictures, pictures with text, cartoon format, etc.

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Edited to add,

Tip for gameplay/setup is to use residential lots. They don't save progress automatically (can do a lot of messing around and not save, leaving the lot clean and perfect for the next time), they let you have full control over sims in the household (and babies/toddlers/pets), there's fewer bugs with poseboxes, you can more easily ban sims from the lot, and there are a ton of other advantages over using for instance community lots.

It works best if you have a set script (for instance chapter-based) to work from, so you can plan out photoshoots in such a way you can do everything on one lot, then move to the next, do everything there, move to the next, and so forth.

Residential lots also have the advantage that (as long as you don't have autosave or don't use community lots) they don't save the lot unless you tell it to, so if you want the lot to reset to its original state for the next time, you can do any changes you need when you first enter the lot, save, mess about as much as you need to, then exit to the neighborhood or quit the game without saving, and the lot will reset to the last savepoint. I'd often create a mess I couldn't be bothered to clean up, and sometimes I'd tear down the CC in the rooms I didn't intend to use (especially for heavy lots) so the computer had an easier load.

Interesting idea-here's another suggestion (and yes, it's going to involve a lot of CC)-an alternate world such as going back in time to perhaps the medieval or further back, and then coming back to the modern day time.
That could get interesting, I think.

^^ I agree, especially with time travel stories! We have a vast collection of medieval, western, Victorian, regency era style cc for sims 2 that could supplement a great time travel story!

Depending on how "benign" you wanted the other world to be, you could incorporate other challenges such as in Lord of the Flies (William Golding) or Tunnel in the Sky (Robert Heinlein). Although both of those books involved multiple children, the length of stays weren't expected, they had environmental challenges to overcome, and yet some would have preferred staying there while others had a tough time adapting back to their "normal" world.

And then more along the classical storyline, Twilight Zone episode "The Bewitchin' Pool" had two children go through a portal in the bottom of their swimming pool to an idyllic world as an escape from real world problems but they had limited (3 maybe?) trips they could take there and after that they couldn't go home again.

So I'd probably not make the alternate world all cotton candy and unicorns, but have some obstacles for the Sim to overcome there. Conquering those obstacles might make staying there better, might change the Sim's view of their real world, or change them in some way that makes them understand, for better or worse, their real world situation.

I'd probably have the alternate world similar CC-wise to what I already had in my game just to avoid CC bloat but might take advantage of some different ground covers, rocks, trees, and maybe a sky color mod and/or lighting mod to give it an overall different look. Perhaps it would always be snowy there or be on a beach while they came from an urban city just so the transition between the worlds is significant.

Agewise, you could also imagine time moving at a slower (or faster) pace on the other side.

So a sim child lost there might come home to find their siblings grown up and their parents elders, or they have grown up, but nobody else did.

I like the idea of doing a fantastical subhood to a normal neighborhood, and then restricting walkbys and community lot use to keep them from showing up in the wrong one.