A 78-year-old male with a history of mild cognitive impairment is brought to the psychiatric consultation service by his daughter, who reports that over the past 2 days he has become confused, agitated, and unable to recognize family members. She states he was at his baseline cognitive function 3 days ago, managing his finances and having coherent phone conversations. On examination, he is disoriented to time and place, his attention fluctuates markedly over the 30-minute interview — at times he is lucid and conversational, then minutes later he is picking at his bedsheets and mumbling incoherently. He reports seeing 'children playing in the corner' of his room. His sleep-wake cycle is severely disrupted, with agitation peaking in the evening. Vital signs show a temperature of 101.2°F and heart rate of 104 bpm. His daughter asks whether his dementia has suddenly worsened. What is the most likely explanation for this acute change?