He's too tired to refute things like aliens and magic and a weird place he's found himself where people can make things happen that he's not used to. It very much seems like a dream.

"Yeah. He was made in the future, and then robot mice bit off his ears, and he cried until he turned blue which is not how anything works." He informed Yondu. "But it's a story it's not real. And then his owner sent him back in time to be with his grandfather who was a kid then, and then they go on adventure and use gadgets to get out of trouble."

He was just about done with the toaster, screwing the panels back into place.