The use of based in in can also be used (perhaps only idiomatically) in a synonymous way with rooted in.
Specifically, it can be juxtaposed with both fantasy and reality.
From an article called "I’m in love with a woman in work. Should I tell her?" in The Irish Times:
So what you feel right now? That is not love. That is want and infatuation and obsession, and it’s not based in reality; it’s based in fantasy.
You might argue that based in fantasy is short for based in a fantasy world, but that doesn't explain the use of based in reality—because it's certainly not short for based in a reality world or based in a real world. Both fantasy and reality are being used here as concepts rather than shortened forms of a countable noun.
We understand based in reality in the same way that we understand rooted in reality.
From Merriam-Webster's definition of rooted in:
: formed, made, or developed by using (something) as a basis • Her opinions are deeply rooted in her faith. • a dance rooted in African tradition
In an equivalent sense, based in does not need to refer to a physical location.
In fact, if you look at the Merriam-Webster definition of based, it doesn't refer to "a base of operation" but to an adjective:
: having a specified type of base or basis • a soundly based argument • I realized that his technique was psychoanalytically based. —Robert Klitzman