User blog comment:Jho5689/Fairy Tail 337 and onwards/@comment-11232389-20130625163146/@comment-4829046-20130626080429

-_- Jesus I wish I was in this one. The following text is very confusing and even I can't get all the facts straight, so forgive me if it sounds strange.

No, Edolas is a parallel dimension.

Here's a little rule about time-space. Change in just one event, leads to a massive difference in the other time-lines. For example, say Erza's great-great-great-great-great Grandfather married woman A and that resulted in Erza generations later, but this came about due to many factors(environment, politics, location etc.) now imagine if it were a different scenario with different environments, politics etc. and by some miracle the family tree followed the same path as the first time, now comes the twist, the great-great-great-great-great Grandfather marries woman B instead, cause woman A did not exist, the factors that lead to her original existence were erased during the timeline. In other words, Erza would not have been Erza(it may even be a male), that is if the family tree was successful after that in the first place.

This is a completely random example and you can use anything you want to replace the people mentioned but the fact remains that things are COMPLETELY different and thus lead to different things.

Taking these into account, the parallel universe concept is special and unique, according to that, the other world is a mirror of one world, the evolutionary events are the very same, but at the same time, the world itself is the complete opposite.

You know what? If you can't make heads or tails of my lame explanation then here.

http://en.wikipedia.org/wiki/Parallel_universe_(fiction)

All the answers are here. But the basic idea is that Edolas is a parallel universe.

And yes the biggest factor; "Why are the characters physically the same?" is due to a miracle really, it is a result of strange unexplained circumstances.

But hey, If Mashima isn't going to go to that much detail then all this is pointless like Wrath said =P