Yep. When the fayth "dreams" Zanarkand, they actually summon it, along with all its citizens. That's how sin could get there, and how he could exist in the rest of Spira.

No one would be likely to find it, seeing as their technology was pretty low-level, and no one dared to travel into the unknown oceans, because of the threat of Sin.
The last part is what I think, so don't mistake it for the absolute and undeniable truth :p.