Green’s Dictionary of Slang

(US campus) not in touch with reality, eccentric.

1957		Wash. Post 29 Sept. F1/1–2: Of course, ‘lunching’ is the opposite of O.T.L. (out to lunch) which plainly tells you that someone is out-of-it, not-in-the-groove, or not-with-it.
1976		Eble Campus Sl. Nov. 4: OTL – distracted, detached from the real world.
1989		H. Rawson Dict. of Invective (1991) 278: Who would want to date Henry? He is O.T.L.
1996		Eble Sl. and Sociability 37: Two kinds of shortening reduce words to letters. The dominant type in college slang is initialism, which names the individual letters: [...] OTL (out to lunch) ‘inattentive, unaware’.