A slang word for people who live in "fantasy land"
Consider space cadet:
- (slang, derogatory) One who deals with reality in a way consistent with being under the influence of (or "spaced out on") drugs.
- (slang, derogatory) One who forgets, daydreams, or otherwise is distracted from reality more often than most.
Ngrams for space cadet shows its use increasing steadily between 1970 and 2004, since which use has flattened out.
La la land: Not very current but very apt:
A place renowned for its frivolous activity; a state of mind characterized by unrealistic expectations or a lack of seriousness.
It first was used, I think, for the fantasy life in Los Angeles (where Hollywood is) but generalized to an attitude.
I'm not sure, but I think I saw her flip me off in my rearview mirror — ah, the ties between the famous and the obscure that bind the fabric of our lives in La-la land.