The Land of Fiction in the 'Doctor Who' story "The Mind Robber" is not an alternate TV dimension like the worlds of 'The West Wing', '24', 'Prison Break', the Tooniverse, or the evil mirror universe. It is the Literary Universe, another universe born of the creative spark of Mankind's collective imagination; like the universes based on TV, movies, theatre, opera, poetry, song lyrics... even graffiti!
And as with the movie universe, characters from the TV Universe can cross over into the Literary Universe, and vice versa.
Many of the characters met by the Second Doctor in the Land of Fiction actually exist in Toobworld - Rapunzel, Gulliver, and D'Artagnan, definitely the historical characters like Cyrano and Blackbeard. Characters we may consider merely legendary or mythological in the real world - the Minotaur, Medusa, and Sir Lancelot - are also real people in Toobworld.
(Karkus was pulled from Zoe's memories of a comic book in her Time, so he'd be from the comic book world we know from 'Once A Hero'.) About the only characters in the Land of Fiction that came fully from the Master's imagination would be the White Robots. (More on them in a separate post.)
But all of them were considered fictional because they were based on the "writing" of the Land's Master (not "The Master"). So this would be the world from which George Washington and Jack of the Beanstalk came from in episodes of 'Bewitched'. In fact, it could be surmised that rather than summoning actual historical figures, the magic of the "witches of Westport" was in fact bringing these fictional versions through the vortex which separates the TV Universe from the Literary Universe. When the Second Doctor freed the Master from the control of the Master Brain computer, it was believed that the lack of a human brain's imagination from which to feed caused the destruction of the Land of Fiction. This is another case where people accept whatever the Doctor tells them at face value. But in fact, since the Land of Fiction is an entirely separate universe, maintained by the gestalt of Mankind's imagination as applied in books, it still exists. At best, it was that particular vortex that was destroyed - so that it looked to the Doctor as though the whole place had been destroyed. Or he could have been lying to the others, as he had in the past and would do as well in the future. (Like in saying how old he was, or that he had a human mother just so he could get laid by a human! Unless of course this rumor that Claire Bloom is appearing in one of the upcoming 'Doctor Who' specials as the Doctor's mother is true, and she does turn out to be a human!)