I recently read that some toddlers have such active imaginations, that they actually believe what they are imagining.
Sort of like Calvin and Hobbes.

Calvin, a mischievous little boy, and his stuffed Tiger, Hobbes find themselves in all sorts of trouble. To the adults, Hobbes is a stuffed Tiger. To Calvin, Hobbes is his very much alive tiger and best friend.
Similar to Calvin, Jelly has her imaginary friends...Bella and Becca. These two, who I assume are her sisters, whom she loves to boss around all the time. She plays with them at home, fights with them in the car and the moment hubby or I interrupt, she gets very shy and bashful about it, "No, turn around!"Bella and Becca have quite the reputation around our household (similar to Hobbes), they usually are the ones causing any and all the trouble...well besides what our fat cat Tobee doesn't do.
She can become so actively engaged with her sisters/friends...that sometimes hubby and I have a hard time distinguishing whether she is talking to us or her friends.
I am not quite sure what the psychology is behind imaginary friends, if it is toddlers learning social skills, how to have a conversation or if it is a coping mechanism (loneliness or helping them through a difficult situation) or maybe it is as plain and simple as a developmental thing.
Does your little one have an imaginary friend?