It's a combination of things, really. It's not so much one thing as it is the culmination of everything she's suffered in the years since his death. As mentioned below, Elphaba experimented with the Wizard's elixir to dream about the other world like Nanny said her mother did. After experiencing nightmares from it, though, she slowly stopped sleeping entirely to avoid them. She's always been a conspiracy theorist, but in the years following Dr. Dillamond's and Ama Clutch's deaths, she slowly went off the deep end and began developing paranoia. After seeing the scarecrow talismans after she came to visit Munchkinland again, she began to develop a suspicion around scarecrows in general. Elphie's later years were later spent trying and failing to atone for her affair with Fiyero (first with the Maunts, and later on with Sarima in Kiamo Ko) as her involvement with him is what led to his death. Despite becoming friends with his widow and making Kiamo Ko her home, because Sarima essentially forbade her from confessing what she had done, Elphie spent those years being tormented by guilt and a lack of closure. This, of course, never got resolved for her because Sarima, her sisters, and two of her children ended up dead and his only daughter was taken as a hostage by the Wizard and enslaved. After being haunted by her guilt for well over a decade at this point, she sprung at the chance to make up a sleep-deprivation fantasy about him being alive and well - because she wouldn't need to gain forgiveness if she didn't cause his death in the first place. Liir mentioned right before Dorothy's arrival that his heart's desire was to have a father, which Elphie believes was Fiyero because at this point she is more or less convinced that she was his biological mother. For all her abrasiveness in her later years, Elphie does love Liir, knows how much he longs for a paternal figure, and envisioned Fiyero as the Scarecrow in part because she badly wanted to give him the father he never had. At this point in her life, Elphaba's just... lonely, man. She's lost almost everyone she's ever loved, through either death or perceived betrayal. Dr. Dillamond's Nessa's dead, Sarima's dead, her father's never going to love her like he loved Nessa and the shoes that represented his love have been taken by some random child, Glinda gave said child the shoes even though she knew Elphaba was hurt by them decades ago, and Boq was afraid of her after Madame Morrible. She still had Nanny and Liir, yes, but they didn't understand her like those others did. They see her at her worst, her most crotchety, while knowing nothing of what she's been through. And yes, while she does have her familiars, they can't talk with her, no matter how much she tried to teach them. At the height of her mania, she simply wanted to not be alone anymore. In short, sad reasons. Many, many sad reasons.