well this illusion is only a tactic used in the Netflix shows it seems, because the films do a good job of portraying a fictional place where everything is happening in the same place. with the Netflix shows, it seems like the illusion is only constantly being put back into place to remind the viewer that it is supposed to be same place as the other IPs.
You misunderstand me. It's an illusion in both cases, because it's fiction. All shared worlds are illusions. The MCU is very consistent in establishing the illusion that all the movies are in the same made-up world. They do not try to build an illusion that the Netflix shows are in the same world. The Netflix shows do try to build the illusion that they are part of the same world, albeit weakly (for the reasons I mentioned).
Your original question was "what world to the Netflix shows exist in, if not the MCU" and my answer was "they aren't real, and there is inconsistency between the MCU producers and TV producers leading to a contradiction." Easy head-canon is the Netflix shows are in a parallel universe which is mostly the same (had an invasion, has Avengers) but also includes the Netflix stuff. Loki and future stuff may contradict or confirm this; in the meantime, it's up to the viewers to make up their own minds.