From the level of turiya (pure awareness), there is no world, no dream, no waking, no you and me.
But from the level of the jiva (the apparent individual self), due to avidya (ignorance), the mind projects the world.
In reality, awareness does not actively superimpose anything.
Rather, the mind superimposes multiplicity, time, space, cause, ego, and objects onto awareness.
So in a way your question has the answer, except in technical terms, it is not a hallucination but ignoring basic and absolute facts—this awareness is the same in me as in you. It is the only thing that IS.
This idea is the basis of all human religions, except a lot of religious sects later attributed external, manlike, anthropomorphic qualities and called it God, Allah, etc. Other religions with more insight maintained God’s transcendental qualities and clearly saw that this God transcends everything in existence, failing to see the absolute truth that everything is nothing, in reality.
So to sum it up,
The Upanishad teaches four quarters (pāda):
- Vaiśvānara—Waking state, outward-knowing consciousness.
- Taijasa—dreaming state, inward-knowing consciousness.
- Prajña—Deep sleep, unified mass of undifferentiated awareness.
- Turiya—The fourth, neither outward nor inward nor both. It is nondual, timeless, and unchanging.