The difference between imagination & hallucination is somewhat similar to the difference between the self-talk or the thought flow that happens in your head & your voicing the thoughts in front of the world. When you imagine, you create a possible reality in your head while you are still aware of your current reality however when you hallucinate, you experience an alternative reality through your senses/single sense in addition to your day today sensing of reality. For ex: in your imagination, you might converse with the miss universe with the awareness that it is just in your head. If you hallucinate the same, you shall experience it in reality through your senses & believe it to be true.