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Reality Bubble is the world you can see or more specifically is the world around you.
It extends about 70 tiles in any direction, with you at the center. It is only within this space that most monsters officially move, fires officially burn, and chargin happens. Other methods exist of simulating these, such as hordes spawning or the game keeping track of the weather, but thats all hacky.
Reality bubble patrol refers to the tendency for monsters to spawn at the edge of this 70 tile radius and hang out there, waiting for you to move into their sight range.