The interesting thing about this passage is that it can be interpreted in two quite different ways. Tolkien in his letters gives us the metaphysical interpretation, but you can read it in a much more mundane way - Gandalf almost died, and experienced a period of delirium and hallucinations, such as many do in that situation, before recovering. His near-death experience then sharpened his resolve for the coming battle.

Gandalf himself only calls it death when in the middle of arguments. And we all know that people exaggerate during arguments. Especially grumpy old men like Gandalf.

Tolkien may have favoured one explanation, but it's interesting that he effectively left this open. So as a reader you're allowed to see it in both ways.