Waking dreams/transportation to dream world when awake

[unity100]

However, I'm curious if anyone has any insights into what might be happening when this occurs

I think you already have your answer:

The first time I ever experienced this, I was on a high dose psilocybin mushrooms. This actually happens quite frequently when I take psychedelics (LSD or mushrooms.)

Very likely subconscious illusions, stuff, maybe possibly experiences from other lifetimes and so on. When you use substances to go into subconscious and connect to the deeper roots of the mind, telling what's what is pretty difficult. That's why it should be done via meditation and actually living the life ahead of you.