Is Simon's dialogue with the Lord of the Flies real or in his imagination?It's in chapter 8.
In chapter 8 of "Lord of The Flies," Simon's dialogue with the Lord of the flies, symbolized by the pig's head on a pike, is not a literal conversation. Simon is prone to seizures. He is also a symbol of the good human beings, yet, he sees the beast too. He is the "Christ" figure in the book.
His vision is not real and he is rendered unconscious after the dialogue is completed.
“The half-shut eyes were dim with the infinite cynicism of adult life. They assured Simon that everything was a bad business.... Simon replies to his interpretation of the head’s mocking expression: “I know that.” He is surprised to have spoken aloud. He imagines the head is telling him to “Run away. . . . Go back to the others. It was a joke really—why should you bother? You were just wrong, that’s all. Go back, child. . . .” Instead of running, Simon looks around and contemplates the beauty of his surroundings in contrast to “the pile of guts [that] was a black blob of flies that buzzed like a saw.”
Golding is using this method of story telling to engage the reader, further define Simon as an outsider and a saviour as well as foreshadow his ending. This is were Simon realizes the true beast is within themselves and not a "real monster." Simon then goes into a seizure.
The ambivalence of the nature of this "conversation" is intentional. It sets the tone of the book as something mystical and irrational, with "powers that be" at work over and beyond the mere personalities of the boys.
The rest of the plot line and character development is excellent, but this aspect of the story is Golding's ultimate stroke of genius which sets the book apart as a literary work of art.
The following reference is well worth reading.