Julian Jaynes gave a very concrete definition of self-reflective consciousness in "The Origin of Consciousness in The Breakdown of The Bicameral Mind". Though he did not use the term, his definition can be thought of as a description of the mind operating as a virtual reality.

Not all minds are conscious, in this definition. Minds are things which maintain correlations between a being and the external world. Conscious minds are minds which have developed a "space" in which to simulate alternate possibilities. In this space, there is a simulation of things like the past, the future, alternate worlds, things not presently available, etc.

Within this "space", there is usually the "I", that is, the one perceiving the simulation, and the "me", a representation of the self projected into the simulation. These are unique elements, and are just as much part of the simulation as anything else.

Anything imagined is perceived by this "I", as if the "I" were a non-personal camera. When someone imagines things involving themselves (past memories, etc), they are actually simulating both an imagined world, and a representation of themselves (an avatar?) within it.