in terms of communication utility, it's also a very accurate term.
when WE hallucinate, it's because our internal predictive models are flying off the rails filling in the blanks based on assumptions rather than referencing concrete sensory information and generating results that conflict with reality.
when AIs hallucinate, it's due to its predictive model generating results that do not align with reality because it instead flew off the rails presuming what was calculated to be likely to exist rather than referencing positively certain information.
it's the same song, but played on a different instrument.