One thing we can conclusively deduce if this is correct is that they either had no moon and no tides before the time of the Sage, or the original somehow got blasted out of orbit. Edit: Unless the tides are also magical in this universe.
Or Pain was spouting grade A bullshit he might have genuinely believed because hes batshit insane. Has noone considered the plothole 10tails being sealed in a preexisting moon?
Im no physicist, but a 'moon' the size that Pain made low enough in the sky to look as large as our moon.. and keeping in mind its orbit must be stable..
Im pretty sure it would be moving fast enough, and close enough to the atmosphere, such that it would be a molten globe of superheated material spewing down liquid death to the poor souls below.
It would probably also be creating the mother of all sonic booms. Constantly.