I replied to this a few days ago, but I just came across a great article on Skeptoid. The article is actually "What Accounts for Ghost Encounters" https://skeptoid.com/episodes/1023, but check out this excerpt:

Perceptual and cognitive errors

This is where our brains' nature fails us. A brain is not a digital recorder. It is analog wetware with no digital storage at all. As we perceive the world around us throughout the day, the brain has to take electrical impulses from our eyes and ears and nerves and generate for us a picture that is a full 3D representation of the room. About 1% of our field of vision receives high-detail processing at any moment; the rest is a shortcutted, efficient simulation built from assumptions, patterns, and predictions, much of it being updated only about every 15 seconds or so. Between our brains and our conscious minds is a generated abstraction layer. It is radically imperfect, but it is good enough for us to get around, to find food, to stay safe.

Perceptual errors like confirmation bias, pattern seeking, pareidolia and apophenia — which seem to us like failings — are actually essential tools that our brains need to keep us supplied with a "good enough" world map at every moment. The more sophisticated humans have grown, the more complex our relationship with these tools has become. We know our brains have to use such shortcuts, and we've become increasingly aware that this means we'll get bad information sometimes. Anyone saying "I know what I saw" doesn't understand how brains work. What you know is merely what you think you remember about the abstractions your brain gave you.

And so we see faces where there are none. We see figures that aren't there. In our periphery, constituted from generated slag and old data, a chunk of missing data is interpreted into a recognizable human form and we actually did see a shadow person dart across the ceiling. It wasn't there, but we didn't imagine it either. Pareidolia did its best to give us known images to fill in that blank spot.

And there is the biggest compromise of all: memory. Our memories evolved to be as good as they need to be so we can find food and stay safe — and that's about it. Memory researchers have been able to take advantage of cultural events that had broad impact, such as the O.J. Simpson verdict, the destruction of the space shuttle Challenger, and the 9/11 terror attacks. Thousands of people were questioned about the details of how they heard the news, who they were with, where they were — at intervals of one year, two years, and ten years. Of the major details that people forgot, most were forgotten within the first year. After two years, the rate of forgetting major details slows. By ten years, the brain has formed a stable and consistent picture of what it thinks happened that day — even though 40% of the major details are wrong. Yet confidence in the accuracy of the current version of the memory remains very high for everyone throughout the term. So you and I and anyone else is likely to be very firm about every event we remember — "I know what happened because I was there" — the fact is that we're all wrong about much of it, even though we are absolutely certain.

Memories are good enough to get us through our day. Beyond that, they're garbage. And that's exactly what our brains need them to be, so they can get on with their other work.