It doesn't "hallucinate." It provides incorrect output. That is all.
"Incorrect output" is broader, encompassing other failure modes. If you ask an LLM to respond in JSON with a list of common foods, and it instead writes a paragraph of text that contains a list of common foods, then that would not qualify as a "hallucination" by my understanding of the accepted definition, but it is still "incorrect output".
One way to devalue incorrect terminology is to call it out when you see it, and use something accurate instead. That's how people learn.