Bishop Berkeley observed that the only reality is the reality as we perceive it.

These 5 stages are the stages that the audience experiences when watching a movie (or reading a script).

Life before FADE IN is the audience when they're buying their ticket (or skimming their streaming offerings).

Life after FADE OUT is the audience leaving the theater (or closing their browser).

Everything in between is what the viewer / reader perceives.

In my opinion, that's why the 5 stage path works well (and better than the Three-Act Structure does).

The 5 stages are how we perceive movies / scripts.