We don't need a fancy word that makes it sound like AI is actually intelligent when talking about how AI is frequently wrong and unreliable. AI being wrong is like someone who misunderstood something or took a joke as literal repeating it as factual.
When people are wrong we don't call it hallucinating unless their senses are altered. AI doesn't have senses.
oh but you see, it's "hallucination" when LLM is wrong and it's hype cycle fuel when it's correct. no, LLMs don't "hallucinate", that implies that this state is peculiar, isolated, triggered by very specific circumstances. LLMs bullshit all the time, sometimes they are right, sometimes not, the process that produces both types of response is the same. pushing for "hallucination" tries to obscure that. use of "hallucination" also implies that LLMs know something, they don't, by design. it just so happens that if they "get" things right, it's because it appeared in training material enough times to make an impression in model.
Bullshitting to me is giving intentionally wrong statements. LLMs do not generate intentionally wrong statements. Saying they do, means that you imply intelligence.
LLMs know nothing nor are they intelligent. They also are not right or wrong, they generate output based on statistics.
"Hallucination" as a term for "AIs" making things up is used since the early 2000s (even if it's meaning has changed since then).
bullshitting as in when you give a confident answer without regard of actual reality. previously discussed there LLMs do exactly that: generate confidently, authoritatively sounding text without regard of facts, because these things do not know facts or anything for that matter.
The wikipedia page you linked to actually states that the term is being pushed by industry (Google, Meta, OpenAI) and that its use is criticized by some researchers.