02 Experience is the product of three major brain systems.
The story of the evolution of episodic memory is also the story of three complementary brain systems, which evolved together to make it easier for the brain to learn.
The first system (of the three) to evolve is what I'll call "the Immediate Action Network" (IAN). In humans, this system is characterized by the outer shell of the brain, the neocortex or cerebrum. This layer of the brain includes all the processing areas for input (i.e. the senses), for output (i.e. motor and speech areas), and some decision-making processes that connect the two (e.g. premotor). The evolved consolidation into a central nervous system allowed for speedy and coordinated processing in systems that are widely distributed across the body. Healthy brains with IAN systems can process information about the outside world, make decisions about what to do next, and quickly execute those decisions.
There are things, however, that an IAN system cannot do. It is tuned to the organism's immediate environment, but it cannot imagine or remember other environments. It cannot make plans for the future. And it has a very hard time learning from the past.
To be clear, most mammals (among others) do start their lives primarily with an IAN-only system, and it learns very well. Humans' first five years are primarily guided by the IAN system, while our other two systems are still developing/being educated. But there is a tension within each of these IANs, when it comes to plasticity. Plasticity is very necessary in the beginning of life, because that is how the newborn brain maps itself to match its environment. But once the major lessons are learned, then plasticity can become a problem, because it can erase earlier important lessons. So the brain starts extremely plastic, learning lessons like "who is my mother?" and "what do my predators look like?" or even "what is the difference between a shadow and an object?" Those kinds of lessons need to be learned early, and not be over-written. So throughout childhood and adulthood, the early lessons becomes 'baked in' to a neuronal structure that is increasingly rigid and resistant to change.
But life-long learning is not only helpful, but it's essential for some kinds of lifestyles, like migratory ones. Landmarks need to be learned. Food sources change. Novel threats arise.
So some brains developed two additional systems, to help the IAN learn. Together, they comprise the episodic memory system. The best known of these two systems is the hippocampal system, and its relationship to the IAN is relatively straightforward. The IAN processes information about the outside world, including its own behavior towards the world. And then the IAN sends information about that processing to the hippocampal complex, which turns that information into a storable long-term 'movie' which can be learned from later.
So, the hippocampal system evolved to turn the IAN's processing into a movie, a movie which reflects what was happening in the outside world, and what was happening with the body, and it records that movie for the brain to learn from later. If the organism has an interaction with a new predator, for example, that one interaction may not make an important change in the plasticity of the neocortex, so that it learns efficiently about this new danger. So the hippocampus plays back the memory of that initial interaction, over and over again, and teaches the IAN from repeated exposure.
When the brain sleeps, it uses those memory movies 1. to help consolidate memories, so they become saliency-rich but data-lean, and 2. to help educate the IAN system. The latter is where a lot of our IAN's learning happens, since our IANs are no longer very plastic to the outside world. In REM sleep in particular, memories are played back, again and again, backward and forward, to help the IAN system learn. Landmarks, for example, become more familiar through hippocampal repetition. Skills, like playing a new song on a guitar, are learned through hippocampal repetition.
In fact, almost all adult IAN education happens through the hippocampus. Every interaction we have, every life-lesson, almost entirely makes a mark on us, only because of our memories. We know this because patients who have lost their hippocampi in adulthood can essentially no longer learn. Some very rudimentary physical skills can be taught, but the patient doesn't even remember that they've learned the skills. Once the hippocampus is destroyed, the IAN becomes unmoored from time, essentially unable to learn.
So we can see that the IAN processes the current moment, and sends only its (modular) final conclusions to the hippocampus, to be combined into one comprehensive piece of information, an experience movie about the self-in-the-world, which is the new episodic memory. That memory movie can later be replayed, to help the IAN learn, during sleep and down-time.
But there seems to be a missing element here. Doesn't a memory movie need an observer, someone or something to recall the memory, to watch it and to derive lessons from it? And indeed, that is what the third system evolved to do, to help close the loop of episodic memory, so that experience movies could not only be created and played back, but also could be deciphered for meaning, and to drive lessons for the IAN to learn.
That third system was originally called the Default Mode Network (or DMN), but I'll call it by it its currently accepted name, the Core Network. The Core Network evolved to make sense of the memory movie as it's being made, and as it's being recalled. It has a much greater role in our lives now, but I think this is how it began.
From its evolutionary beginning, the Core Network was the home of imagination. This began in a very humble way, as the ability to match disparate noisy inputs. For example, if a rat is navigating novel terrain, it may see a visually distinct landmark, and add the sight of that landmark into a new memory, to be matched later, when navigating the same territory. The recall of that landmark will be pattern-matched with the brand new memory of the new navigation, to ascertain whether this is indeed the same landmark.
Now imagine that the rat approaches the same landmark, but from a very different angle. The pattern-match is no longer exact (or even close), because the different angle creates different patterns on the rat's visual cortex. Or maybe the rat's approaching the landmark under different lighting conditions. So imagination began as a way of transforming one view into another, so that the two views could be recognized as the same landmark. Imagination helps memory from being too rigid in recognizing familiar stimuli.
The Core Network evolved to specialize in these two functions: 1. to be able to derive meaning or lessons from experiences, and 2. to be able to imagine how things could possibly be, when there's not enough immediate evidence to fill in the blanks. This second skill of the Core Network includes imagining what goes on in other people's heads, or visualizing how to pack bags in the trunk of my car.
These three systems: 1. Immediate Action, 2. Memory Movie recording + storage, and 3. the Interpreter of Experience / Imaginer of possibilities created an ongoing loop with which the brain could continue to learn, long after the IAN had lost its initial plasticity.
The same loop, however, also reifies the perceived self, Me. For the sake of future lesson-learning, new memory-movies are simulations of the self-in-the-world. From the Core Network's perspective, the memory IS the real experience, as opposed to being a construct of the brain. And the self-in-memory is understood by the Core Network to be the real Me.