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Well, it is and it isn't. In a promotional interview at the time, director Walter Murch said: "I like to think of it as a sequel to one side," meaning that it is a sequel to the generic story of The Wizard of Oz, but not of the 1939 version.One can argue that it ISN'T a sequel because it presents an entirely different look and feel from the original; characters and places are very different, it is not a musical, and the entire tone is much more sad/somber. The fact that Dorothy looks so much younger and references things we never saw in the old movie (such as Lunch Pails and the Deadly Desert) all suggest that this film takes place in a different continuity.However, one can also argue that it IS a sequel because it picks up the story immediately afterward and has many stylistic similarities to the 1939 film. For example, Return To Oz begins with a 20-minute prologue in Kansas (an element in the 1939 movie but not of the original books). While Dorothy is younger and acts a little different, her braids and clothing resemble Judy Garland's interpretation of the character. The story's choice to have the Oz characters foreshadowed as characters in Kansas is an obvious nod to the 1939 film. Finally, Return To Oz follows Wizard of Oz's choice of Ruby Slippers, as opposed to the Silver Shoes of the original books. So while Return To Oz may take place in a slightly different continuity than the 1939 movie, it never directly contradicts it, as having Silver Shoes would have done.
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