They did indeed live in a lovely world, but it was very sheltered from the not-so-nice world around them. What makes Morris so fascinating to me is how he tried to connect the two worlds through art.
Another funny story -- I did my master's thesis on the sociology of arts & crafts shows and in my oral defense, I brought up Morris's Socialist (capital S) work. One of the professors, who happened to be a British transplant, immediately jumped down my throat and said "William Morris was no socialist!" One of the other professors said, very quietly, "Uh, yes he was." I then pointed out that in my bibliography I cited most of Morris's works as being available online at www.marxists.org. "Yes, Dr. T*****," I informed him, "William Morris was a Socialist. With a capital S."
Burne-Jones maybe not so much. 
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