; Date: March 5, 2020
In The Timeless Children, The Master kidnaps The Doctor in - I believe that room was The Panopticon. The Panopticon was shown in several Old Who episodes. Next to The Panopticon is an area with access to The Matrix.
The Matrix is a gimmicky gizmo developed by The Time Lords that is a record of a zillion different things, including a complete record of all Time Lords. The Matrix was shown several times in Old Doctor Who. The most infamous being the season called The Trial of a Time Lord, in which The Doctor demonstrated that someone had tampered with The Matrix to falsify his own historical record.
In fact, during the last episode of that season - The Ultimate Foe - it was revealed that The Master is the one who manipulated The Matrix to create a false historical record.
That's the setup - The Master has The Doctor in a loopy-energy-force-field-trap-thing. While in that trap, The Doctor is able to inject The Doctor into The Matrix. The purpose of all this is to show The Doctor the true history of his/her life, so that The Master can show The Doctor about the Lie of the Timeless Child.
The story shown was based - so The Master said - on records he decoded from The Matrix.
These records show the origin of The Time Lords as being when Tecteun, an early scientist and explorer of the Shobogans went traveling the universe. The Shobogans were the original race of Gallifrey, and it seems some Shobogans (descended from those who did not become Time Lords) still lived in the wild areas of Gallifrey. During her travels Tecteun came across an uninhabited planet with a strange building above which was a portal into infinity. Wandering around that building was a child who seemingly dropped from the sky.
From that child Tecteun learned the secret of Regeneration. "Learned" is a loaded word, because it seems that Tecteun probably tortured that child, repeatedly killing the child in order to observe the regeneration process.
Once Tecteun decoded the regeneration process, she injected it into herself and she was able to regenerate into
Once regenerated, Tecteun was able to construct a version of the regeneration drug that limited the number of regenerations to 12 occurrences. She then offered this to the people of Gallifrey. And, after "Time Travel" was created, the ones with the gift of regeneration started calling themselves Time Lords.
Erased records in The Matrix
The key point is that somewhere along this story - the record stopped. The Master and The Doctor ended up in a grey place.
The Master then told The Doctor that there was a bunch of The Doctor's history which The Master was unable to decode. The grey zone was this area of non-recoverable information.
Did the Master lie?
It's been shown in televised Doctor Who that The Master knew how to manipulate The Matrix.
It's well known that The Master lies a lot.
For example in the episode The Master lures The Last Cyberman to Gallifrey, dangling before him the potential that Cybermen could use Gallifrey technology by cooperating with The Master. But it's clear from the episode that The Master had intended to betray The Last Cyberman all along, in order to steal The Cyberium and for The Master to become the host of The Cyberium instead.
The Master sought to destroy Gallifrey -- because he was upset over learning about The Timeless Child? The Master bothered by the torture of The Timeless Child? Doesn't seem likely. It's more likely that he sought to steal Gallifrey's power all along.
Therefore it's certainly within the range of possibility that this Timeless Child myth is another made-up Plot of The Master.
Evidence against this theory
While The Doctor was in The Matrix, she must have had the same thought and asked The Master point-blank whether he was lying. The Master said that uncharacteristically to himself, he was telling the truth.
As Travis says in the video below - The Master told His Truth. Does that mean The Master showed the entire truth?
It seems from The Doctor's reaction to this information that she is believing the record that's shown is correct, and that she must have had pre-Hartnell incarnations.
The power of the episode was when The Doctor dug down into herself and recognized that this new information did not mean she was not who she was, and did not negate all she had done between the Hartnell and Whittaker incarnations.