To imagine something is to picture it in your head. When we imagine things, we're using our imagination.
The word image is a good clue to the meaning of imagine, a word for picturing or envisioning things. You could imagine you're a king, an astronaut, a firefighter, or a coyote. You could imagine the earth getting hit by an asteroid. If you can think of it, you can imagine it. Sometimes, imagining means believing or guessing. For example, your teacher could say, "Did you really imagine there would be no homework?"