So called "fabulous reality" or "the fictional dream" is a writer's term for what a visual artist calls "white space"--it's a matter of retraining the eye, or the intellect, to see the outlines of things as they actually are rather than as we expect them to be. Which is why grounding and detail work are so important: those keenly observed details are what break through the symbology barrier and put the reader into the world of the story.
It's all about learning to *see*. No, really.
There's some discussion of this in Robert Anton Wilson's nonfiction (if you can call it nonfiction), where he talks about reality tunnels, too.
It's what makes the best writing seem fresh and crisp and concrete: the writer is showing us not symbols, but actual things. Things that seem to have a visual and tactile reality above and beyond their existence on the printed page.
All of which makes me wonder: at what point in the last two years did I suddenly learn what the hell I was talking about, regarding writing fiction? Because I don't think I knew this in 2001.