A hallucination is a visual, auditory, or some other type of sensory distortion that is mistaken for something real. These can be brought on by a variety of different factors, such as being under the influence of drugs.
The Smurfs experience various types of hallucinations in various episodes of the cartoon show. For example, in "Mummy Dearest", Greedy mistakenly saw a couple of rocks in the desert as some muffins. In "Smurfs At Sea", Dreamy when he is out at sea and suffering from hunger thinks he sees and hears Smurfette and Papa Smurf as mermen, saying that a couple of starfish have invited them down to dinner.