It's non-diegetic, like the transmission playing at the end of the film, it is not actually happening because that does not make sense although we can think up potential reasons, it simply exists for the visual and auditory texture of the film, whilst only the audience's present in both cases.
Edited addendum:
Alien³'s not a dream because of this fact, anymore than Aliens because of the non-diegetic or diegetic noise in the credits, or Alien Covenant letting us know it's in on the show with us by using the life theme in both ways once each in the film.