"how can it be an imagined reality?" In the case of an after image, then, yes, there is something physical going on. But what about the Kanisza illusions?
This becomes an exercise in semantics. It's not "real" because there is no pink unicorn there, or even a picture of a pink unicorn (c'eci n'est pa une pipe), but it IS real, because it is a physiological difference in firing patterns across certain retinal ganglion cells and other neurones in the visual pathway up to, including and beyond the visual cortex. "Teach it phenomenology, Dave".
It's invisible because no-one else can see what you can see, at least those who haven't seen the green unicorn first in the same way you did. As my ex-boss and professor of neuroscience who spent a 50+ year career studying the visual system always said "If you perceive it, then there's something to be explained."
So "real" has as vague a definition as "God". I agree with your point about people thinking about themselves.