Chief Bromden imagines that the hospital has humming machines that create a fog, but in reality the fog is his murky thinking and hallucinations resulting from his drugs and 200 treatments of electroshock. The Chief retreats into this "fog" because he has difficulty with reality and is paranoic.  For instance, in Chapter 4, Bromden watches the head nurse and notes,

The nurse closes up the folder [on McMurry] and passes it ....to the doctor. "Our new Admission, Doctor Spivey," just like she's got a man folded up inside that yellow paper and can pass him on to be looked over. 

As the session continues, Bromden recalls how Nurse Ratchet asks the men to reveal their secrets. Then, she puts all the Acutes "into a trance" by sitting in complete silence for twenty minutes.  After this time, she asks if there is no one who has committed a secret act. In what Bromden perceives as a threatening gesture, Nurse looks at a log book and threatens to "go over past history."  It is then that the paranoic Bromden imagines "some acoustic device in the wall" that comes on as it is prompted by the words in the nurse's mouth. This acoustic device is part of the fog machine for Bromden, a "machine" meant to intimidate the men. And, it works as the men shout about their deviant sexual exploits. Nevertheless, Nurse Ratchet continues her victimizing of the men and Chief Bromden continues to hear the sound of machinery. The fog provides him the ambiguity to escape the confrontations and rancor of the therapy sessions.