In videogame programming you eventually run across the topic of "threads". When you play a video game, everything appears to be happening at once, but it actually isn't. Technically everything is happening one thing at a time. For example, you see 4 people walking away from each other at the same time, what actually happens is the code will alternate between person 1,2,3 & 4 and move them each a small amount, then once all the calculations complete it updates the screen with a new "frame" of what it looks like after all 4 players moved at the same. You can only read one book at a time, computer code is executed just like you read a book, and is limited for those same reasons except it does it incredibly fast. Even the picture on the monitor technically doesn't display all at once, however its done so quickly we cant notice.
However when you try to process more information than the hardware can handle, you essentially get lag. In a video game things get choppy. You still get real time information shown to you every frame but it can begin to look like a slideshow. What I propose is that the perception of time, is actually a form of lag for our minds.
The lag i propose however would not be in the same way it happens on a computer as we would not get visual lag. However with computers you can sacrifice other processes in order to devote more to a particular task, I believe the mind is doing the same thing based on some things.
First the passage of time is almost non-existent when we sleep, I think this is a clear indicator that it has something to do with whether you are conscious/aware or not.
Second its is known that time goes by slow when you are bored, and faster when you are having fun. However fun is not the only case the speeds up time, as being extremely busy can make you "loose track of the time”. In the case of being busy your mind must dedicate itself to many different tasks, in the case of fun you are hyper aware of what you enjoy. The reasoning behind hyper awareness is that if you listen to 2 lectures, the one that bores you will drag on and you will remember less of it. Yet the one you like will go by much quicker as you dedicated more resources to this one man speaking. The difference between paying attention and someone who has your full attention.
As to the time illusion itself, it is not only our visual, audible, or any one thing in particular that makes up our conscious experience. However our "internal clock" calculates the passage of time likely involves many things and if your mental awareness of time were to "lag" because it is waiting to be updated, you essentially get an effect that is like game lag where several frames are missing in between, except what happens visually for a game is happening mentally to your perception of time. Lag also doesn't necessarily mean the game time slows down it just updates you less and are therefore less aware. In similar fashion, the audio in a video game can play flawlessly while the framerate goes down showing you less, yet the frames you are shown are perfectly in sync with the audio. Lastly when you are bored or doing something mundane like staring at a clock, you free up resources for everything else your internal sense of time need to be updated so you now are aware of every bit of time and thus there appears to be more of it
