When someone throws a ball it is possible to predict where the ball will be based on the person's stance, motion during the throw, speed of ball, trajectory, etc. If you see a window in front of the trajectory you can sense a risk of danger.

When you walk through the park on a warm, sunny day and see melting ice cream you can guess that some child or distracted adult dropped it. You can also guess how long ago it was dropped depending on how hot it is outside and how melted the ice cream is.

When you meet someone you know you can guess how deep your conversation will go, its quality, the topics of discussion, and many other attributes based on your knowledge of the person.

The brain seems to be able to model reality to some extent and play it out in your mind forward or backward. The scenario I'm thinking of is that humans are sort of like a robots with five sensor channels and a brain that has a fancy built-in AI process that tries to model reality from the sensor data being streamed in during experience. The purpose of the model is to help aid survival by avoiding danger and acquiring resources/rewards. The model of reality does not need to be accurate as long as it prioritizes the main purpose.

What I'm trying to figure out is the details of how this process creates, updates, and uses this model. So far my guess is that past experience is a stream of sensor data from which the brain builds and maintains a model. In any moment the current physical and mental context activates within the brain the data and parts of the model relevant to the current context. The brain then uses the data and models to aid decisions/actions. This is vague and it's all I have. I tried looking for actual theories that explain the process in detail but have not found anything that gives details.

Do any of you know about the current best model of how a person models reality? Or at least where a catalog of them might be found? More specifically, what model best describes how to take a sensor stream of five channels and build and maintain a model of reality. Also I would like to know how the model is then used/activated in any given moment of experience. The theory does not have to exactly model how the brain does it. I'm looking for at least a non-vague logical model that does not have to get the structure exactly right.

**UPDATE**: I will attempt to make this question less broad.

I'm looking for a high level explanation of two things:

1. What is the process or sequence of operations that takes sensory data in any moment and updates the model of reality that person has built up so far?
2. In any given moment what determines the parts of the model of reality that will be used out of the entire model? Given some current context most of the model is probably not relevant. What rules or processes determine what is relevant to use for thinking/decisions/etc?

Basically, I'm imagining two main things happening in any moment. Sensory data comes in that can cause an update to the model. At the same time that data coming in activates parts of the model to be used for thinking, actions, etc.

In terms of granularity what I am looking for something high level and at most 1-3 paragraphs per stage. I want to be able to create a diagram of the process and for each arrow or node in the diagram I want a paragraph summary of what is happening.

Essentially, I would like an explanation of the process for those two questions at a high level (no deep details necessary).

**UPDATE**: Everything mentioned has been useful. Predictive coding mentioned by Johannes appears to provide the best explanations and there are experiments to back up the idea. The video I linked and the Anil Seth video linked by CriglCragl both seem to be about predictive coding, although they don't use the phrase specifically. If I find or develop something more useful for this post I'll add it.