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RE: Our brains exist in a state of “controlled hallucination” - MIT Technology Review
Using the word "hallucinate" is a bit misleading. Hallucinate means perceiving things that are objectively not there. Words have meanings.
However, the article and video discussions are very interesting stuff. The preliminary studies seem to imply that "consciousness" are a series of states, not a "continuous thing". And that there are many kinds/types of consciousness. The authors have done a good job of explaining complex neuroscience that everyone can understand.
I agree that "hallucination" seems to be overstating it. Other descriptions that they use are 'best guesses' and 'predictions'. I like those better.
To play Devil's Advocate from the example of the blue dress, though, I guess Seth would respond that even when we "get it right", it's just because our predictions and best guesses happened to match reality fairly well, but we're still perceiving a mental model, and not just whatever is actually there.
I think this quote from the article explains the perspective well,