In the comments to the last post, Richard suggested that I could do some extended examples of false realities (Hallucinatory Domains) in various genre examples. As I said in my response, I don't really feel up to writing all that seriously about the topic, and in any case I don't have my copies of The Golden Bough or various references for The Prisoner or film noir (the examples he suggests) handy. I'll just make a couple brief comments on some other examples that come to mind.
Life on Mars: Sam Tyler's story is quite literally presented as a struggle between two realities, with just enough evidence of one to make him doubt the reality of the other, but not enough to convince him completely. The resolution to the series depends on him figuring out the termination clause that will get him back to the "real" reality (and I hope this isn't two spoilerific, but he actually discovers two termination clauses...) Sam is thus the target of the Hallucinatory Domain spell.
Donnie Darko: The director insists this is meant as straight-up sci-fi time travel, but I prefer to think of it as a fantasy from the viewpoint of an unreliable narrator. The plot of the movie focuses on Donnie discovering that a "time paradox" has created a false branch in the time-line; to save the world, he has to figure out the termination clause -- in the context of the movie, he has to perform a certain action at a certain time to jump back to the point where the branch was created and resolve the paradox. Donnie is the target of the Hallucinatory Domain spell.
Legion: Not all that great a movie, but I saw it fairly recently. We actually don't see what's happening in the rest of the world, we just hear some news reports -- which might actually be part of the delusion that the main characters are caught in. The target of the Hallucinatory Domain spell is the pregnant waitress, and the exit condition is the birth and survival of her baby. Surprisingly, that parallels The Seventh Sign: Demi Moore is the target, and the birth of her baby (with a soul) is the exit condition. In both cases, the exit condition ends the Apocalypse.
The Seventh Seal: Speaking of movies with heavy Christian symbolism, in Bergman's film, the unreal state is the physical presence of Death incarnate; the knight is the target, and his job is to find the exit condition before everybody dies. Surprisingly, it's the same exit condition as movies where Death is prevented from fulfilling his duties and people are suffering because they cannot die (I've seen a couple of these movies, but the only title I remember is Death Takes a Holiday.)