"Hallucinate" predates LLMs.

For instance, before transformers, when we finetuned ESRGAN for specific styles/functions, we used to say it would "hallucinate" in detail that couldn't possibly be in the original image pixels. GenAI wasn't much of a thing back then, and we never thought of the small GAN models as "remembering" things even though thats common language in transformer models. It felt more like we were teaching the GAN a job or style, not encoding memory.

And I think it fit! "Hallucinating" detail into a blurry pixel blob feels like a more accurate analogy to the human condition, and we weren't at the point where it was "confabulating" and generating big objects out of the blue like a diffusion model can.