From Collision Detection:
Social critics have lambasted fantasy games and video games for making kids "unable to tell the difference between a game and reality." I've always thought that is transparently untrue. Indeed, that attitude seems less like an indictment of the brains of gamers than the brains of the critics: The latter are clearly so unaccustomed to using their imaginations in vivid ways that they immediately regard anything fantastical as being too much for the brain to handle.
A Wired article reports the phenomenon:
The difficulty of separating real-life consciousness from that of game playing: "It's so common, in fact, that game publishers might want to consider warning their customers that they may soon be unable to tell the difference between the game and reality. "
"The phenomenon of having difficulty defining reality after hours in front of the screen isn't at all limited to games." The article mentions software programs, but the argument could be made for time surfing or chatting.
Previous related thoughts on immersion, suspending disbelief, and a child's perception. (Yes, they're related.)
I don't think people experience this "sensory overlap" when they walk away from a movie. Is it because movie is limited in time, or is it the nature of the medium that helps us keep our distance? As television technology evolves, will the experience become more immersive at the level of consciousness?
Books. It happens with books. I think it happened for Don Quixote.