Dictionary:

la-la land

  (lä'lä)

1. A place renowned for its frivolous activity.
2. A state of mind characterized by unrealistic expectations or a lack of seriousness.

[After L(OS) A(NGELES).]

1.  Los Angeles, California (often abbreviated L.A.). This expression pokes fun at the alleged eccentricities of the city's inhabitants. For example, What do you expect? Frederick has lived in la-la land for ten years and it has rubbed off on him. [Slang; c. 1980]
2.  A state of being out of touch with reality, as in I don't know what's going on with Amy--she seems to be in la-la land. [Slang; c. 1980] Also see cloud-cuckoo land; never-never land.