there are of course a number of related words from the same roots, but whereas fabulate does have a connection to fantasy, since fabulation is something a fabulist or fabulator does, it also has wider applications, as can be easily seen in confabulate as the con prefix means "With" or "together" so Confabulation is essentially "with fabulation"

That said I guess the version of fabulation I was using is pretty antiquated, probably due to my reading too much 19th century fiction where describing a passel of lies as a pure fabulation would be something people would do on the regular.