In the world of storytelling, the term “suspension of disbelief” refers to our (typically subconscious) decision to set aside logical arguments and other aspects of critical thinking while engaging with a fictional narrative.
Characters in a film or novel might make decisions that defy rational thought, or the plot might pivot around some kind of MacGuffin (a plot device that has a sort of gravity within the storyline, but which isn’t all that objectively vital) that everyone wants for some indiscernible reason, and it’s important—if we want to enjoy the story—that we don’t seriously question those decisions or that desire.
In the world of video games and other sorts of interactive media (including non-digital media, like tabletop roleplaying games) the term “magic circle” refers to the aura of suspended disbelief surrounding those involved, within which the rules of the real world don’t apply.
So while everyone involved in a game of Dungeons and Dragons might know that orcs don’t exist and magic isn’t real, these players can still have logical discussions about magic-premised strategies meant to help them defeat an especially bulky and ferocious orc.
The same portions of a game players’ brain that allows them to solve real-world problems (in accordance with the rules of the real world as they understand them) are thus reoriented toward in-game rules and challenges, and because of this magic circle, this doesn’t feel strange or discordant.
The mindset that allows us to embrace the rules and seeming realities of a magic circular context is sometimes called “lusory attitude,” and it refers to our capacity to accept in-game structures and strictures for the purposes of achieving a desired experience.
So while it’s possible to angrily question each element of a supposed world in which magic and orcs are real, that wouldn’t make for a very entertaining experience; much better, from the perspective of wanting to play and exercise our mental capabilities in a more liberated (from real-world concerns, at least) environment, is to go with the “let’s imagine things are like this” flow and adjust our mindsets accordingly.
Similar mind-shifts can also be found in non-game settings.
People who would rationally question a story about a human being rising from the dead in their normal, day-to-day lives, will sometimes suspend that disbelief when engaging with similar stories in a religious setting.
Likewise, folks who would typically question the truthfulness and legitimacy of another person’s questionable claims will set aside those quibbles and qualms when it comes to representatives from their own political party, subconsciously (or consciously) deciding to pretend that the normal rules don’t apply in this particular space, and they can thus turn off their BS-detectors.
The same lusory attitude that allows us to disengage from the real world for a time, adopting the rules and limitations (and additional powers) of a fictional context for the purposes of enjoying an entertaining scenario, can also nudge us into accepting fictions and falsehoods in the real-world, then, as long as we can be convinced that the normal rules shouldn’t apply, and that other context-shaping concepts (like tribal affiliation or faith) are more important than our default critical faculties in these specific settings.
Another word for this is willful ignorance.