Creating a new reality is a formidable task, because not only do you have to consider the trappings of reality (objects, senses, space), but the fact that these trappings are only relevent in context of the foundation of reality -- the consciousness. If you can fool the conscious mind into being so immersed in the current experience that they are singularly concentrated on it as the only experience, the the illusion is successful. The word illusion then becomes irrelevent, even, as to them, that *is* reality. As far as the VR'ed individual is concerned, the space in which they are existing is a space that exists, and as such, is real by definition. Just as in experience, one knows that they are experiencing, likewise do they know that the experience exists, whether or not it is tied to some source, some referrent.
Hence, in virtual reality, one becomes transposed into a different reality altogether, albeit a reality created by human beings.