They were very cunning, in that respect, an operating sense of sequential logic, not usually a part of mental impairment.
They understood, by reasoning and factual input , how to do some actions that would result in other humans concluding a concocted scenario. They were not projecting a fantasy, they were setting a scene, an alibi, a ruse to offset any questions being raised. This is psychopathy, not mental illness.
They absolutely understood the difference between façade and reality, … but fantasy was a chosen route.. it wasn't what overtook them, uncontrollably. They chose fantasy as a relief from boredom.