Hallucination

Hallucination: define as 'Perception of visual, auditory, tactile, olfactory, or gustatory experiences without an external stimulus and with a compelling sense..

Hallucinations are also a form of altered perception. Currently, Sam, with the 'wall' broken in his head, is having intense hallucinations of Lucifer, which has gotten to the point where he starting to be amenable to the Devil's commands.

With that, many of things have occurred in Supernatural, and they are:

War's spell, you could call it, made everybody in the radius of a small town, see demons where there were none.