When asked about the world Fursona takes place on the Sodor Island Forums, I told the user that the world of Fursona is...complicated, let me explain...

Sodor and the Contiunity of Various Sources

The game exists in a mixed timeline in which characters from the Railway Series/Classic TV Series (Sir Topham Hatt, Vicar Charles Laxey and Jem Cole) and model HiT era (Mr. Percival), CGI Series (Sir Robert Norramby) and even Thomas and the Magic Railroad: Director's Cut (P.T. Boomer). All these characters exist amongst one another and proves that the game exists in its own continuity which takes different elements from the Railway Series book and the various eras of the TV Show.

Shin-ra, Starmen and Happy-Happyism?

Next I address why Shin-ra exists whilst there is a Starman Jr. boss fight and the apperance of Jeff Andonuts and Mr. Carpainter at the Arlesburgh inn. Well...

The game takes places in the modern present day sans COVID after the events of MOTHER 2/EarthBound in 199X but before Final Fantasy VII, this is evident in that Shin-ra is just a mere weapons company just starting out with a prototype Mako Reactor and that if the events of Fursona didn't happen, Mako Reactors would've been built across the world as the penultimate renewable energy source and uses its newfound wealth and power to destroy world governments via the SOLDIER program and built Midgar as a integrated industrial and residential facility creating a self-sustaining Anarcho-Capitalist society. However this would change due to interference with a galactic empire and attracting the ire of Zack and the gang thus leading to Shin-ra's premature downfall.

The reason Starmen appear in the game is because after Giygas' destruction. Many Starmen were left behind, without a leader or a cause, they turned to Emperor Lattem and Dark Streit as a volunteer army and thus they will appear starting in Act 2 and I mustn't say much else as I want you to find out, dear player.

Also Mr. Carpainter is an optional boss complete with thunder attacks so have fun!