Confabulating is more like you have 1 or more inputs (drugs, stress, self-interest,trying to save face, your attitude towards truth, etc) and they all go into a homomorphic black box where they interact and bump into each other.
And at the end of the process there is a sociological hash function that puts it all together and manifests it through actions andthe narrative(s) we tell ourselves + others.
The output/behavior/self-talk and reporting are the result of all this and they don't come from nowhere like a hallucination does (in the sense of there being an objective lack of external sensory input, not the neurological/etiological basis which clearly exists).
They have a basis upon which they fundamentally make sense and demonstrate reference to the world around based on how their actions and words are parsed and its not useful to describe LLMs or humans in this way (`hallucinating`) when they are almost always simply in a MonkeyClaw type situation. They have the input and this is a natural result of such input, like any computer does when you process anything else. It follows its instructions and the logic is always inherent to the context and inputs + limitations at play.
Confabulation also often involves "filling in the gaps" one does not have the knowledge or influence or abillity/desire to address so they throw something else that might stick if they luck into avoiding further scrutiny. Sometimes people are "just" lying to you but more often, they are trying to avoid further pain and avarice (maybe even try to gain something) and they simply tell everyone (including themselves) what they want to hear.
Kids are like this, hilarious confabulators. Not hallucinators.