Another way of framing it would be along the lines of 'catastrophic backtracking' but attenuated: a transformer attention head veering off the beaten path due to query/parameter mismatches.
These are by no means exhaustive or complete, but I would suggest knowledge exhaustion, stochastic backtracking, or simply perplexion.
Verbiage along the lines of misconstrue, fabricate and confabulate have anecdotally been used to describe this state of perplexity.
Like, it's a bit sarcastic, sure, but until factuality is explicitly built into the model, I don't think we should use any terminology that implies that the outputs are trustworthy in any way. Until then, every output is like a lucky guess.
Similar to a student flipping a coin to answer a multiple choice test. Though they get the correct answer sometimes, it says nothing at all about what they know, or how much we can trust them when we ask a question that we don't already know the answer to. Every LLM user should keep that in mind.