I'm curious if you're trying to describe something I experience.
Kratom has always increased hypnagogic hallucinations for me, which started after years of alcoholism and a psychosis induced by psychedelics which I (mostly) recovered from.
However recently kratom also started causing me to, what I can only describe as, dream while still awake. About 1 minute after I close my eyes I will start to have extremely vivid dreams, yet I know I am still fully awake, and I can actually hear the sounds/dialogue of the dream internally in my head in a very real non-imaginative way, but in the 1st person/internal dialogue perspective. They aren't external auditory hallucinations, I am very familiar with those. I guess it's some weird internal type of hallucination. It's different than dreaming because I am aware I'm still awake and there is no "reboot" process that happens when you wake up from a dream.
It's rather hard to describe. I also believe past damage from drugs/psychosis are playing into this, and it's not purely the kratom itself, it simply brings it out and makes it worse.
Anyways, I recently quit kratom due to this and other factors. I was on it daily for 8+ years.