These hallucinations represent non-pathologic instances of deafferentation hallucinations. Basically, when visual input is removed by closing the eyes, the visual system does not just turn itself off. It more or less idles and does what it normally does, which is to construct the continuous hallucination we commonly refer to as "seeing." See Visual release hallucinations and the Ganzfeld effectfor an introduction and The neural basis of Charles Bonnet hallucinations: a hypothesis for a serious article on the topic.
Levels 1, 2 and 3 (Patterns, motion, and color) hallucinations occur because primary Visual cortex neurons respond to edges, lines and stripes (Simple cell; Complex cell). In essence, subjective perception of geometric images represents a momentary glimpse at the mechanisms of vision in action, mechanisms normally "behind the scenes." The following article gives a sense of the current maturity of the field: "Geometric visual hallucinations, Euclidean symmetry and the functional architecture of striate cortex" by Paul C. Bressloff et al http://www.math.utah.edu/~bresslof/publications/01-1.pdf
Levels 4 and 5 (objects and things, perceptions) involve higher visual areas along with the primary visual cortex . Modern research on the subject suggests the brain uses structures associated with normal visual perception (such as the primary visual cortex, area 17) to generate internal visual imagery (Is visual imagery really visual? Overlooked evidence from neuropsychology; The Role of Area 17 in Visual Imagery: Convergent Evidence from PET and rTMS; Visual angle of the mind's eye before and after unilateral occipital lobectomy).
Updated 27 Jul 2015 •