The Mandalorian season 2, episode 2, "Chapter 10 - The Passenger" suggests that even though the Empire is defeated, the galaxy is still a mess. For years, the galaxy was ruled by the conquering force known as the Empire, which had a stranglehold on many systems in the galaxy. Led by Darth Sidious, the Empire ruled over the people of the galaxy with an iron fist. But as powerful as they were, they didn’t go unopposed. The Rebel Alliance fought against them for a long time, and eventually managed to end their oppressive reign in a civil war.
In Return of the Jedi, Luke and Anakin Skywalker finally rid the galaxy of Emperor Palpatine. With the fall of the Empire, the galaxy entered a new era, and the Republic, which was once the main governing body in the universe, was restored, now been rebranded as the New Republic. This is the era that serves as the main setting for Disney+’s The Mandalorian. Mando (Pedro Pascal) and Baby Yoda’s adventures take place five years after Return of the Jedi, and several years prior to Disney’s Star Wars sequel trilogy.
Occasionally, a character in The Mandalorian will drop a line that sheds some light on the current state of the galaxy. In The Mandalorian season 2, episode 2, Mando’s trip to Trask is interrupted by a pair of the New Republic’s X-wing pilots, who are trying to make sure that Mando isn’t an Imperial. One of the X-wing pilots notes that “these are trying times”, which has led some to wonder about what he means. The Empire, which was hated for so long, is finally gone, yet it would seem that the galaxy is still in a state of unrest.
It’s important to keep in mind that the Empire had such a strong, wide-reaching hold on the galaxy, that there was no reason to be believe that their defeat in Return of the Jedi would erase them right away. As shown in The Mandalorian season 1, there are still remnants of the Empire causing problems for civilizations in the galaxy. That’s why the X-wing pilots were suspicious of Mando, as it could be that they’re consistently causing trouble for the New Republic, who are still working on rooting them out and repelling them. The Mandalorian season 2 premiere similarly showed that the Empire's defeat wasn't wholly good for Tatooine, as slavery returned and mining companies took control. The Empire had to be removed, but the power vacuum causes chaos that can't be quickly contained.
All things considered, it’s not surprising that it would take more than five years for the Republic to get back on in its feet. It could also be that while in the rebuilding stage, the New Republic is suffering through some economic woes in certain parts of the galaxy. There was also a lot of uncertainly going on in the political side of the spectrum, as many were divided on what the future of the New Republic should be. The lingering existence of the remnants of the Empire only complicated matters. The Republic is clearly on their toes when it comes to the Imperials, and given the concerns they must have about them ever trying to come back, their fears are understandable in The Mandalorian season 2.