How can you explain the hallucinations that Lennie has while he waits for George?
Of Mice and Men is a novel-as-play as was Steinbeck's later effort, Burning Bright. The constraints of the stage may ultimately be the most effective explanation for Lennie's vision of a giant rabbit and his deceased aunt.
Even so, the highly practical and persuasive explanation provided in the other post here can perhaps be supplemented by a more diegetic (inside the story) explanation of Lennie's hallucinations and by an additional reading of Lennie as a figure intended to be preyed upon in a system that roots out psychological weakness.
There is a temptation to see Lennie's hallucinations at the end of the story as emanations of the Freudian psyche. Specifically, Lennie's visions of his Aunt Clara and the giant rabbit seem to align well with the idea of the Super-Ego, the portion of Freud's tripartite psyche associated with morality and socialization.
The figures of Lennie's hallucinations chastise him and express the negative views that society will have on Lennie's behavior. Aunt Clara tells Lennie that he "don't never take no care" and that he does bad things, never appreciating his sole caretaker and friend, George. The rabbit proclaims that Lennie is crazy and that George is going to punish then abandon him.
"He gonna leave you, ya crazy bastard. He gonna leave ya all alone. He gonna leave ya, crazy bastard."
In these exchanges, we might see Lennie's social conscience working through the hallucinations and connect them to the notion of his Super-Ego. Taking this interpretation, we might note that Lennie seems divorced from the point of view being expressed by his aunt and by the rabbit. Although he is aware of society's views and mores, he is incapable of integrating them into his own behavior. He is wild, like the rabbit, and he is destined to disappoint those who care for him, like Aunt Clara.
The phrase "crazy" may have powerful implications here as well. If Steinbeck intends for Lennie to be seen as a victim of an unforgiving system, this term becomes more than a colloquial exaggeration. Rather, "crazy" becomes a mark of doom for Lennie because it is a weakness that will make him a target.
Steinbeck's biographer, Jackson Benson, suggests that Lennie fits a pattern that appears through much of Steinbeck's work and that is informed by a pervasive philosophical attitude.
"People who act by their dreams are defeated; people who try to change things are usually unsuccessful. The best that man can hope for is to be able to adapt to what is and to survive. There is even a natural selection in his work. The weak, the deformed, the deficient [...] do not survive."
Lennie's hallucinations then might be seen as proof of an inability to adapt that, coupled with a tendency to act by his dreams, set Lennie on a path to certain destruction in the Steinbeck cosmos. Not only is Lennie incapable of integrating socially and thereby adapting, he is incapable of integrating his own psyche. He is a broken man.
Alternatively, we might see the hallucinations as a simple indication that Lennie was not in control of his own mind and therefore not in control of his own behavior. This helps us to see Lennie as a victim - - a victim of his own weaknesses - - to be pitied and to be understood as a symbol of the difficulties we all face in attempting to live socialized lives in a competitive system.
Steinbeck would not have invented Lennie's hallucinations for his book if he had not been planning to adapt it for a stage play to be produced in New York the same year the book was published, which was in 1937. The book was written in such a way that it could be quickly adapted to a script. All the dialogue is already written and the settings are described in such a way that they can be turned into stage directions with ease. Steinbeck called Of Mice and Men "a playable novel." This explains why it is so short and ends so quickly. The play could only run for an hour and a half or so.
In the novel Steinbeck could have explained what was going on in Lennie's mind while he was hiding out at the riverbank without resorting to hallucinations. But that would not be possible in the play. This scene created special problems. Lennie would just be sitting there in silence, waiting for George. So the hallucinations in the novel, or novella, were intended mainly for the New York stage play. Steinbeck wanted Lennie to be waiting for George when the scene opens, but he needed dialogue, because that is the only way exposition can be conveyed on the stage. The hallucinations make it easy to use a lot of dialogue. If Lennie and George were both sitting there together, it wouldn't convey the same idea--that Lennie had come there to hide and wait for George as George had earlier instructed him if he got into trouble.
Steinbeck specifies that the two figures in Lennie's hallucinations are speaking in Lennie's voice.
And when she spoke, it was in Lennie's voice. "I tol' you an' tol' you," she said. "I tol' you, 'Min' George because he's such a nice fella an' good to you.' But you don't never take no care. You do bad things."
This is how the New York theater audience would understand that these are hallucinations. The actress who represents Aunt Clara could be speaking her own lines, but there would be no way to show a talking rabbit. The producers must have used an exceptionally big stuffed rabbit in the play. It probably had to be custom made, since it would be impossible to find a big enough stuffed rabbit in a department or specialty store. And if the actress playing Aunt Clara spoke her own lines, there would be no way of knowing she was an hallucination. The audience would naturally think that the real Aunt Clara had somehow come back to life and was confronting Lennie at his riverbank hideout. They might even take it for a flashback.
It is essential to understand that the novella Of Mice and Men was intended to be adapted immediately into a stage play to be produced in New York. The play was probably much more important to Steinbeck than the book because it would reach the most important people in America. Both the book and the play were successful in 1937 and made John Steinbeck famous.