Regardless of the accuracy of the origin story, Confabulation Theory[0] is the first place that I can recall this sort of explanation that combines knowledge with "honest lies". I don't know how accepted his definition of the word confabulation really is, but it seems a good descriptor of what's going on. Not a hallucination, but more an issue in walking the connections between concepts, with knowledge being stored in the edges.

[0]: http://www.scholarpedia.org/article/Confabulation_theory_(co...