Well, we are always using our internal models for work like this. When our internal models and what we say don't match reality, we might call it "hallucination" or "getting it wrong" or even "lying".

When we get it right — our internal model matches reality, and we also say something that matches reality — we call it "truthfulness", and it's super valuable.

But I think there are two really different sources of hallucination / inaccuracy / lies. One is that the internal model is wrong — "Oops, I was wrong. The CVS isn't on Main St." The other is when we decide to deceive. "Haha, I sent you to Main St. CVS is really on Center Rd." Two very different internal processes with the same outcome.