In the twentieth and twenty-first century, "Reality and its truth had gone inward." What does it mean when it says "Reality and its truth had gone inward"?

I assume this question is asking about how the quote applies to the literature of the twentieth and twenty-first centuries. The quote, "Reality and its truth had gone inward," suggests, to me, that the writer is claiming that literature of this time focuses more on the inner workings of the protagonists' minds. This style of literature is most often associated with "Modernism" and "Post-Modernism" and, in terms of time period, coincides with the rise of psychology as a discipline.
If you think about psychology and what it studies and then relate that to literature, you can see the meaning of the quote more clearly. Psychology studies how the human brain functions, how it develops through different stages, what happens when a brain functions abnormally, and so on. Literature has always been about telling stories about people, about characters. From the Modernist era on, some authors' new interest in psychology meant that they would try to replicate the workings of the human mind more accurately in their novels. This is where the style "stream-of-consciousness" comes in: this is a form of writing in which the author writes from inside the character's mind trying to show how a mind actually works. Rather than organizing and structuring thoughts in ways that are easier for readers to follow, the authors may show characters making free associations from one train of thought to another, without warning. This means the prose can also be more difficult for a reader to follow.
During the period of Modernism and after, most of the authors of this time period lived through World Wars I and/or II or lived in a world after those global conflicts. Those events also changed how people related to the world around them. They could no longer trust religion or government to necessarily protect them. It's easy to see how people could retreat inward and feel more psychologically fractured. This is a mental state many authors tried to capture in their prose—or perhaps, it just reflected how people had come to think in this era.
Some of the authors whose work most lines up with the sentiment in the quote are William Faulkner (especially in The Sound and the Fury and As I Lay Dying) and Virginia Woolf (Mrs. Dalloway, The Waves). James Joyce's Ulysses and Finnegan's Wake are even more extreme examples. Again, to recap, "reality and its truth had gone inward" suggests that authors now sought to only record "truth" or "real life" insofar as it was seen from the perspective of the individual.