Well, yes, garbage in garbage out. That's a given and not what's meant by "hallucination" in this context.

the observation goes beyond garbage in garbage out. Mainly that we're always operating from some prior and limited understanding. That what may look like a hallucination could be closer to the truth than our current frameworks of understanding allow us to admit. The hermeneutic circle.

Interesting. I wonder if current LLMs can break out of human limitations and understand the world more correctly.