In this story, Leonard Mead is out walking in this city where no one ever goes outside in the night. People spend all their time inside their houses, doing nothing but watching TV. Walking through the town is like walking through a graveyard because all the houses have darkened windows, presumably because the people are in interior rooms, watching TV.
This is why Leonard can imagine that he is out in the middle of the desert. Out in the desert, there are no people and here in the city there might as well be no people because everyone is inside. The point of saying that Leonard can imagine this is to emphasize to us just how deserted the city streets are and just how devoid of human contact life in the city is.