It entails being out of touch with reality, where your optimism isn't grounded in comparison to the situation you're in.
For example, imagine climbing Mount Everest and you underestimate the weather, which are underestimating obstacles and risks.
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None of the above! You can use the headlights even if the visibility is way under 1000feet. There are many countries especially in Europe where headlights/daylights must be always on with no regard to visibility conditions. In some cities you will be even given a fine for not having the lights on all the time. But rules vary from country to country...
