In a dream I think I can see a whole world, but I actually can't. Upon closer inspection, only the relevant characteristics of the thing I'm "looking" at are actually "rendered" or "simulated", and the rest is filled in by a vague feeling of "yeah yeah trust me bro there's a world there"

It's basically like AI Minecraft. You know, that project where someone trained a stable diffusion model to predict the next video frame based on the previous frame and the player inputs. Then people started speedrunning it, like by looking down into a lava pool and back up, now they're in the Nether (underground lava dimension). That's how I think dreams are, except you don't even get a full video frame, just one object of focus.