"TWO FORMS OF IMAGINATION
The imaginative faculty functions in two forms. One is known as “synthetic imagination,” and the other as “creative imagination.”

SYNTHETIC IMAGINATION: Through this faculty, one may arrange old concepts, ideas, or plans into new combinations. This faculty creates nothing. It merely works with the material of experience, education, and observation with which it is fed. It is the faculty used most by the inventor, with the exception of the who draws upon the creative imagination, when he cannot solve his problem through synthetic imagination.

CREATIVE IMAGINATION: Through the faculty of creative imagination, the finite mind of man has direct communication with Infinite Intelligence. It is the faculty through which “hunches” and “inspirations” are received. It is by this faculty that all basic, or new ideas are handed over to man." - Napoleon Hill, #TGR

What Hill calls the creative imagination in my opinion is just forgetfulness. In other words when the mind cannot recall the connection between old concepts, it just makes up connections which are not necessarily true, and if you (i.e your mind) keeps on guessing enough times, then eventually you will come up with a new useful connection between concepts. This connection itself will be a new concept.

Another way to understand this view of creative imagination, is to look at how random mutations in our genes, which are mostly harmless and occasionally useful, have led to our evolution simply based on what works in that environment. I imagine that forgetfulness fills a similar niche. It is not that there aren't people who have near perfect memory of their pasts but if they can't forget past ideas and events, then that leaves less space for mistakes in thinking and therefore less potential for growth. This is probably why such health conditions are rare despite not being impossible.

I suppose you could also draw a similar parallel to the way that AI hallucinations work as well, although frankly I don't know enough about AI to make that connection with any certainty. Not that I know much more about how the human mind works. This is just a theory of mine based on my own personal experience as a very forgetful individual. I feel like because I am forgetful I am constantly forced to think on my feet, and so it helps me to make new connections which may not always be the most intuitive but which are creative. The main way that my thinking evolves is by asking questions upon questions, and the reason why I have so many questions is because I often forget what is obvious to others.