This paper presents a critical examination and a novel architecture for the World Model, an algorithmic surrogate for the real-world environment in which biological agents experience and act. Inspired by science fiction novel Dune and the concept of hypothetical thinking in the psychological literature, we critically analyze several perspectives on existing World Models and argue that the main goal of World Models is to simulate all real-world feasibility possibilities for purposeful reasoning and action. Based on this critique, we propose a novel architecture for a hierarchical, multilevel, and mixed continuous/discrete representation general-purpose World Model, and provide a generative and self-supervised learning framework and a perspective on Physical, Agentic, and Nested (PAN) AGI systems.