The brain is exceptionally excellent at distinguishing between and dealing differently between fiction and reality. Consider an actor. Either on a stage, or on the set of a film. They walk into frame, and another person, a real human being, is present. The actor raises a real gun, sneers with an acted hatred which must be presented externally as realistically as possible (and emotions are almost entirely composed of their external expression and biofeedback from same), and points it at the other person. That other person wilts in acted fear, irises expanding, eyes going wide, mouth dropping open, again all the outward expressions matching actual mortal fear. Both actors have the intellectual knowledge, SOLELY intellectual, that the gun is loaded with a blank. The approaching actor pulls the trigger. The gun explodes with its loud retort, the 'shot' actor crumples to the ground, wails in 'pain', whines, and 'dies'. The brain of the shooter is receiving every sensory input that tells them what is happening is real. Great effort is expended in trying to 'sell' the scene, so there is gunsmoke in the room that burns the nostrils, there is 'blood' leaking from the victim, etc. The shooter intellectually knows it's not real. But that is the sole indicator to his brain - an intellectual knowledge that he is an actor participating in a scene and what is being experienced is not real.

In the case where this scene was real, the shooters brain would be scarred. Their neurology would be branded by PTSD, their psychology would be turn apart with regret, guilt, etc. And the only distinction between the two situations is knowing it's not real. Clearly, knowing something is not real isn't just a slight thing. It is tremendously strong (maybe impenetrable) armor against the consequences that assail the brain of a person having a real experience.

The whole brain doesn't need to "tell fact from fiction". Only the one tiny piece that holds the "reality" flag seems to be the only thing needed.

There is now a technology which can mess with this flag, and it freaks me out a bit. It's something which feasibly could be done already in a consumer space, but it's not being used, and probably shouldn't ever be except under strict controls. It is usually referred to as "virtual embodiment" and involves using VR in a particular way that tricks the brain into dissociating from your physical body and identifying very profoundly and deeply with a virtual body. It could be done by anyone with a VR headset and separate webcam with the right software. Research is currently being done using the technique for therapeutic uses, and it seems to have some efficacy. Those experimenting with it, though, have realized its power. It could potentially do real, profound, and potentially long-lasting damage to the internal mental 'model' people have of their selves. It could get weird. Like imagine a 15 minute experience that could afflict you with 'phantom limb syndrome' making you feel like you have a painfully tightened fist on a third arm growing out of the center of your chest. They've obviously not experimented with doing anything like that, it would be tremendously unethical to do so, but the therapeutic uses they have had success with being turned, even accidentally, to 'the dark side', could be pretty harmful it seems.

A year or so back I read an article about virtual embodiment and the researchers involved calling for a 'Code of VR Ethics'. They were considering a much more general case which I disagreed with (and still do) and didn't seem to be considering the situation like I described earlier of the actor. The actor has more "immersion" than any VR scenario will ever be capable of having. The actor knows the person they're pointing the gun at is a real human being - a human being they have a personal relationship with - and the scene is 'rendered' is infinite fidelity across all the senses including smell, hearing, touch, proprioception, absolutely everything is dead on exactly what an actual murderer would experience with only the one intellectual fact cluing the brain in to the unreality. I reached out to Dr. Metzinger, the leader in the field of research on virtual embodiment (I didn't realize who he was at the time, I just dug up his email after the article and was surprised he took the time out to carry on a discussion with me for awhile), and asked for his thoughts, but he hadn't considered the situation before. At a first blush he supposed that because it would be easier for the actor to turn their head and see all the cameras, crew, etc, that might factor into it as it would be easier than 'escaping' a VR situation, but that might be balanced with the lack of fidelity in VR, the weight of the headset, etc.

It's really very fascinating that this intellectual knowledge about the fact of the reality of a situation is so powerful. Intellectual knowledge is usually not very effective at all in influencing how the brain responds to things. Consider the situation where you are a person who was not raised in a nudist/naturist body-positive environment (as statistics would suggest you probably are), and one day you come to the rational conclusion that it is both nonsensical and harmful to you for it to bother you if other people see you naked. You can convince yourself of this totally and fully with perfect rational consistency (because it is perfectly rational). Then imagine you get 'pantsed.' Your intellectual knowledge would not protect you from the automatic emotional response and trauma. To change that would require repeated exposure around others with conscious effort expended to alter your emotional response, something which could take years to have a real effect on the trained response that is your emotional system. Your intellectual knowledge can guide that, but it's nowhere near the nearly impenetrable armor of knowing something is not real. That distinction is, to me, very strange.