Imagination is often equaled with day dreaming. This is an unfair, and even wrong, comparison.
Imagination is the ability to create ideas. Whether these ideas are founded upon the known laws of physics, mathematics and other sciences, or upon the whims of the muses is not of immediate relevance.
What matters is if we can, from the initial raw of material of our lives, create something.
May be as a mash-up of many distinct and divergent elements. Or by the bringing into play of something completely and utterly new. That in some cases it even fails to be recognized.
It should not matter which subset of ideas we are referring to here. What matters is that an idea has been created and in one fell swoop, we have made ourselves greater than every other creature in creation that preceded us.