Yay!!! His imagination is kicking into high gear!!! You want this. It's a sign of normal/ healthy neural development. You also have to nip it... but it is a FANTASTIC sign of his brain developing as it should / (a rather irritating) milestone being met.
Specifically, the fibs that happen around this age are a combo of
- Imagination
- Situational Awareness
- Increasing verbal abilities (that need to be nudged, just a bit... more in a moment)
- Emotional Development / self regulation
What your son is doing is he's IMAGINING certain situations happening (What IF...) and trying to work out how he'd deal with them (mentally and emotionally), AND how other people would deal with them AND how they would react to the way that he has imagined himself dealing with them (aka looking for guidance). He's figuring out "grey" areas. His brain is switching from black and white concrete thinking, to the much more adult shades of grey thinking. At the beginning these will be "very bad" or "very good" possibilities (like WHAT IF everyone else got fed and I didn't???? or WHAT IF I made it through my nap with a dry diaper???). Things he would view to be hurtful/scary, or exciting/happy. As he gets older, they will be far more subtle, things that DEPENDING ON THE SITUATION AND HOW THEY ARE DEALT WITH could be either good, bad, or both.... instead of bad no matter what, or good no matter what.
TO KNOW: he's actually going through the emotions and reasoning that FOLLOW the "what ifs". Which makes it hard on parents, because their kid will actually BE in tears that no one played with them, or they didn't get fed, or their best friend died. OR they'll be REALLY excited about a "victory" that didn't happen. ((Imagine how upset you've gotten from time to time when he was a baby at the sheer *thought* that something could happen to him. Or when you are hormonal and are watching a poignant commercial that ordinarilly wouldn't even touch you. Or non-hormonal and watching a brilliant movie; tear jerker brilliant. You know it's not real, but even as an adult, your emotions respond AS IF it's really real. As ADULTS, we've mostly already done all of our "what if" thinking. It takes becoming a parent, or another major life scare -or a well done book/movie- to have NEW "what ifs" popping into our brains. And then we actually do the full on emotional "practice".))
As a matter of fact... that is a phrase to teach a child going through this phase "What IF __________?", or "Wouldn't it be exciting if __________?", or "Wouldn't it be scary if __________?".
Your son is leaving the land of concrete reasoning and entering into the land of metaphors and imagination and planning for multiple eventualities.
It's kind of a pain to deal with (teaching them new phrases, and being ON them about the difference between why one is acceptable and one is a lie), but like all phases... it passes.