His plans to build a new stadium are the product of pure 'imagination'. [=they are not based on reality; they are not likely to happen]
He insists that these dangers are real and not just 'a figment of his imagination'. [=something that he has imagined]
The author does not tell us what happens to the characters. We have to use our 'imagination'.
(..) Yeah, but I'm not sure about some of the bras I got. Really? Do you want to try some of them on for me? Okay. Wait, are we in Joey's imagination? Oh, no. I took one of Ross' bags by mistake. And one of mine is missing. Ross probably has it. You'll get it from him later. (..)2004 TvShow: Friends Title: The One with the Birth Mother Season: 10 Episode 9