noun
fairyland; never-never land
A whimsical, imaginary place like a fairy-tale kingdom; often used in children's stories or metaphorically for an idealized, unreal world.
この絵本はおとぎの国を舞台にしている。
This picture book is set in a fairyland.
彼の話はまるでおとぎの国のようだ。
His story sounds like something out of a never-never land.
おとぎ話 means 'fairy tale' (the story itself), while おとぎの国 refers to the fairy-tale realm or imaginary land.
From おとぎ (御伽, 'attending someone' or 'telling stories to keep someone company') + の + 国 ('country'). The phrase originally referred to a storybook land, later becoming a set term for fairyland.