The story features characters confined in a simulated reality, involuntarily or voluntarily.

A specific variation of this trope is called a "Lotus-Eater Machine". In this, a character, usually the protagonist, is knocked out or goes to sleep and wakes up in their own personal paradise. In reality, they're being held prisoner by another character who, using technology, magic or other methods, induces very intense and very realistic hallucinations. Sometimes the lotus-eater doesn't know it's all fake. Sometimes they do know but don't care. [Edited from TV Tropes]