This is a long explanation. I hope it makes sense
Nope, the world actually is real they aren't in a game, but to the "kings," they think they got sucked into a game
during the "beta process" the system that brought them to this world went on a search for "heros" to help the kingdoms go through the tower which spoiler* is keeping a creature that is basically trying to destroy their world
the system basically needed to find worthy people who can help. They treat this real world as a game to achieve that
which is sad because if the kingdoms got a horrible king, they actually got a horrible king, the same thing with weak kings
Thats the reason why the GD killed MC at first was because he wasn't worthy he kept failing and he was too weak to be a king but MC kept coming back and got stronger (his abilities are like a support which boost his kingdom and to top it all of his abilities are stronger when both parties are a strong connection) reason why the kingdom managed to reach the highest they love their king and he loves them (this is going to be important later in the story because it applies to his allies too)
GD is upset about something else, which is a whole misunderstanding caused by the system. MC thinks GD hates him and is basically treating GD differently than the others, which is annoying because he loves MC (alot)
I'm assuming that the MC was killed off by the GD himself because he couldn't beat the tower from what this chapter was implying, so MC went back to try again but somehow lost memory during the process. Which is why the GD was more irritated in the MCs third life because he didn't do his job (beating the damn tower) and was going around doing side quests with his new friends.
But imo, I think the GDs dream is actually to break the game so they can be free from the loop. Don't defeat the game = stuck forever in the same life, same grind, same game idk