As for specifically how Oliver is experiencing any of this, the answer might lie in the crossover side of the episode. Green Arrow and the gang will be fighting the Dominators, an alien race with mind control abilities. It's very possible that they use said abilities to trap Oliver in a blissful world of his own creation in order to take him off the board, which would be a pretty clever setup for the 100th episode in that it allows for several characters -- alive or dead -- to appear for Arrow's milestone achievement. Supergirl did use that element already for Kara's trip back to Krypton, but no one said it can't be done again. Or maybe we can just blame it on Barry and Flashpoint.