First off, Life is Strange 3 is being developed right now by Deck Nine (devs of LiS: Before the Storm.) It's being developed on Unreal Engine 4 rather than Unity. It's a full-fledged 5-episode sequel. I've heard that it's been referred to as "Life is Strange: True Colors" in development, but I'm not 100% sure if that's the final title.
The game takes place in the US, but not in the Pacific Northwest (I don't remember where for sure, but it either takes place in the Midwest or the South.) The game will be a return to a grounded, small-town setting (similar to the first game.) The main character is an Asian-American woman named Alex. The main superpower this game revolves around is the ability to read minds. Different characters will have colors surrounding them representing their emotions (hence the name True Colors.)
Music is also a really heavy focus in this game, moreso than LiS 1.
The game should be announced pretty soon. Afaik it was supposed to be announced last year, but COVID-19 must've messed things up.
There is also another Life is Strange game that I've heard is in preproduction, although I'm not 100% sure about the details on this one as it's still a long ways off. It's supposed to be a direct sequel to the first game and it'll feature the same protagonists (Max/Chloe). I haven't heard about this in months so keep in mind it might be cancelled at this point.
