The statement about "once lost, now returned" has not been resolved. I thought about this for awhile, and have a theory. Perhaps originally, there were two moons. When Lavos crashed and the Reptites fell, somehow the second moon was disrupted and disintegrated. However, in the Reptite Dimension, both moons stayed A-OK. That is, until the Time Crash occurred and the red moon was pulled out.
Now, this theory assumes that the Red Moon from the Reptite Dimension is not the Yellow Moon from the Keystone Dimension in composition. If we grant that perhaps they were the same moon in 65000000 B.C., and simple alterations over millions of years changed their appearances, then that theory above is bogus and the quote remains unsolved.