Comment by andybak

When you're in VR the space that matters to you is mostly the virtual space. If you move a controler and some representation of that controller matches it's position exactly then you feel that is where your hand is. The fact that your hands are invisible is quickly forgotten. (Fake avatar hands can often actually reduce immersion - uncanny valley time...)

It's similar to tool use. Tools become an extension of your body and you tend to perceive them as such. Musicians, sportsmen etc are familiar with this feeling.