I think what you're describing here mirrors the situation of the moviegoer (and flips the external / internal the way a mirror does.

The external world of the moviegoer is what happens while sitting in a darkened theater (or living room, or whatever). Watching the movie affects the viewer physically (if it doesn't do so, it fails as a captivating experience). The internal world of the moviegoer is the life history that the moviegoer has experienced up to that point before entering the theater.

In ordinary life, our real world experiences form our sense of identity. This identity is not "hidden" from us, but we rarely pay any conscious attention to it. Still, it is very real--as real as or more so than the detritus of everyday living that we are conscious of.

Moviegoers submerge their presence as created in the physical (outside-of-the-theater) world in order to participate in the external world of the film's characters (by "submerge" I mean the process by which the moviegoers' real-life experiences / identity become an internal world while watching a movie). If you start to think about your own marital problems in the middle of Kramer vs. Kramer, you probably won't enjoy (participate in) the movie.

This isn't the same as the subtext that a real-world conversation might have (wherein the two real people don't say exactly what they mean). In this real-world conversation, the "real" meaning clearly is invisible (but not unperceivable). When movie characters talk "on the nose" in a situation in which real people would not be so obvious, the scene comes off as unrealistic. But the internal world of the moviegoer contains not only the subtextual conversations that the moviegoer has experienced, but ALL of the moviegoer's experiences--conscious or not.

This submerging parallels the process called "willing suspension of disbelief." In order to perceive a movie's (external) plot as real, you can't watch the movie as a conscious "critic."

The movie itself must contain a clear (but not obvious) internal reality for the viewers to relate what they're watching to their own experience: If a movie consists of practically nothing but explosions or zombies eating people, then the audience probably will probably find the movie exhausting rather than engaging.