On a literal level, hallucinations are perceptual. But "hallucination" was already (before LLMs) being used in a figurative sense, i.e. for abstract ideas that

On a literal level, hallucinations are perceptual. But "hallucination" was already (before LLMs) being used in a figurative sense, i.e. for abstract ideas that are made up out of nothing. The same is also true of other words that were originally visual, like "illusion" and "mirage".