phantasy

Fernald has no entry of its own for phantasy; he lists it under imagination.

Where he writes about it:

To this Reproductive Imagination President Noah Porter and others have given the name of phantasy or fantasy (many psychologists preferring the former spelling). — from imagination

Phantasy or fantasy, so understood, presents numerous and varied images, often combining them into new forms with exceeding vividness, yet without any true constructive power, but with the mind adrift, blindly and passively following the laws of association, and with reason and will in torpor; the mental images being perhaps as varied and as vivid, but also as purposeless and unsystematized as the visual images in a kaleidoscope; such fantasy (often loosely called imagination) appears in dreaming, reverie, somnambulism, and intoxication. — from imagination