The Collaborative International Dictionary of English v.0.48:

Confabulation \Con*fab`u*la"tion\, n. [L. confabulatio.]
   Familiar talk; easy, unrestrained, unceremonious
   conversation.
   [1913 Webster]

         Friends' confabulations are comfortable at all times,
         as fire in winter.                       --Burton.
   [1913 Webster]

WordNet (r) 3.0 (2006):

confabulation
    n 1: an informal conversation [syn: chat, confab,
         confabulation, schmooze, schmoose]
    2: (psychiatry) a plausible but imagined memory that fills in
       gaps in what is remembered