The difference is that fantasy goes away when you stop thinking about it, and reality doesn’t. This holds not just for video games but also for literature, spiritual experiences like meditation and lucid dreaming, and hallucinated states.
Some people get brain-damaged or disconnected to the point where they can’t tell the difference between fantasy and reality anymore. This does not change anything, not even for that person. They’ve just lost the ability to tell the difference, it doesn’t change what reality and fantasy are.
I knew a guy once who used to have extremely vivid visualizations. He saw and interacted with angels, demons, had all kinds of adventures, this was his day-to-day lived reality. I spent a long time getting to know him, we’d spend hours every day yakking about shit. Our spiritual realities started to intertwine and I started seeing and interacting with various non-physical entities just as he did.
Then one day he cut all contact with me. He didn’t like the direction I was going and thought it would lead to ruin. After we stopped interacting, every part of my spiritual experiences that were his influence disappeared overnight. Including all the parts he was objecting to.
He couldn’t tell the difference between what was real in his world and what wasn’t. He was vaguely aware, but he just didn’t really care and didn’t really want to know just what was real and what wasn’t and what parts of it was real and which wasn’t. Whereas I kept it in the back of my mind the entire time.
I believe boredom affects this more than anything else. If you perceive reality is ugly and boring, and you find a world that’s magical and amazing, you’re going to want to live in the imagined world. If these states are meditative or drug-induced, then they will actually feel larger than life and it’s easy to just allow your mind to get carried away.