This is probably the last thing I could have imagined for the new season! Love the reincarnation idea. But what about other possibilities --

It's all happening in the Mind Palace, which has somehow expanded into a Mind City.

Sherlock has relapsed and it's all a drug-induced hallucination.

Jim Moriarty has been using his downtime to build a time machine and has sent them back in it. OK that's silly, but maybe he's created some kind of virtual reality extravaganza. I can't help feeling he's involved in it somehow.

Well, we'll find out eventually. Thanks so much for posting this!