For some reason I can't quote asmodee properly, but he's right: The Last World was the original title for The Last Story. However, I find it strange they'd be uploading old concept art onto their site for no reason, so I'd consider the two most likely possibilities:

1) Mistwalker are returning to unused ideas and the unused title from the early stages of The Last Story, as they develop a new title, utilising the "The Last World" as either the working title or the full title. Given Nintendo own The Last Story IP, this will be an exclusive for either 3DS or Wii U.

2) Mistwalker have uploaded this never before seen concept art as part of their position as an "incubation studio"; a studio that creates concepts and artistic designs and then works with outside studios and publishers to make the project happen. By uploading this artwork, Mistwalker are simply giving a proof of what their original concept was, and how it eventually wasn't far removed from the final product: in essence, they're advertising their status as a concept studio to possible partners to gauge interest.

The translated Iwata Asks feature on The Last Story has disappeared, and I couldn't find anything directly confirming The Last World prototype, though I do remember seeing concept art featuring Zael and knights (look exactly as they do in the final game) in a snowy world fighting sci-fi style enemies. The only confirmed pre-Last Story concept art I found was on IGN.

So really, all this image gives us is fruitless speculation. Can anyone find any more details and images from "The Last World" as a concept project? I'm sure they're around somewhere. In the meantime, I suppose we could e-mail Mistwalker or Facebook message Sakaguchi and ask them what they're playing at...

Owwww, come back to platform I own Mistwalker, stop making games I can't play!

The Last Story X Final Fantasy....What? It could happen..

Possible. TLS did reasonably well in Japan.