Place where we believe happily resides the minds of people who are
disinterested,
stupid or simply just disconnected from current
reality - perhaps because their own interpretation of reality is more interesting and important to them.
The origin of the phrase goes back to The Birds, the parodic drama by ancient Greek playwriter Aristophanes, and first performed in 414 BC. Cloud Cuckoo land (the English transliteral of Necphelococcygia) was a city in the sky established and inhabited by birds fed up with both mankind and the gods. The birds have to condend with humans trying to gatecrash their utopia, and the gods annoyed with the birds 'skyjacking' sacrifices sent upwards from earth to Heaven.
Hence the phrase to be in Cloud Cuckoo Land is used interchangably with to have one's head in the clouds.