Machine Wars was a line of Transformers toys released in 1997 as a Kay-Bee Toy Works exclusive. Apparently the line was an early attempt to bring vehicular characters and popular names back into Transformers after the success of Beast Wars revived the brand. Only one wave of figures was produced, and memory of the line has mostly faded. It is a rare example of both a micro-continuity and an implied continuity which nevertheless had a full (albeit very small) toyline.
Machine Wars' placement within the larger fiction is an open-ended question. There is no form of accompanying fiction, nor even a story-establishing packaging blurb to set the stage. The on-package bios establish that ten of the twelve toys are blatantly returning Generation 1 characters in new bodies. (The errant two are Megaplex and Hubcap, who shares a name with but is otherwise nothing like the Generation 1 robot of that name.) As such, many fans have taken to thinking that Machine Wars is part of the Generation 1 universe after Generation 2, since this was its characters' first appearance as toys since then, and the Transformers franchise had not yet explicitly rebooted continuity nor established the concept of a multiverse.
This placement is supported somewhat by Megatron's bio, referring to him taking to the skies "again," likely referencing the ultimately-unreleased Generation 2 "ATB Megatron" toy; as well as the "official timeline" released by Takara on their Transformers site, placing it atfer the events in the Japanese G2 era. Another hint of story progression comes from Thundercracker's bio. Where his Generation 1 bio had established him as being unsure of the Decepticon cause but willing to follow orders, his Machine Wars function is "Rebel Warrior," and he's described as believing in the Decepicon cause, yet "rebellious among his own ranks."
While nostalgia has fueled a return to old Transformers franchises in new fiction and toys, Machine Wars has been largely overlooked. One notable exception is the bio for the e-Hobby-exclusive black Starscream, which refers to his Machine Wars form in the past tense. Also, the Genesis art-book contains a portrait of Machine Wars Starscream. The artist embedded story information into the scene, placing Starscream on the dais where he was once crowned and adorning him with the same purple cape. But the setting glows golden, a reference to the post-Rebirth Golden Age, and Starscream brandishes the presumably-defeated Galvatron's torn-off cannon. Kuphaldt intended the picture to be a sequel to a piece of his own fanart.
It is speculated that the line was a "stopgap" measure due to very early ideas (which Hasbro ultimately did not go through with) for a Generation 1 revival having been told to fans at BotCon 1996 by the Hasbro representative there, Anthony Gaud, and Hasbro putting together a quick line to capitalize on the rapacious hunger of the fandom for vehicle-form toys.
The line is entirely old molds; four small molds that had been originally developed for Generation 2 but were canceled with the line, and four larger toys released in the second to last year of Generation 1 in European markets. The card artwork is often cited as a testament to rushed production; many of the packages have character art from different toys, altered to very vaguely resemble the toy inside the package.