Sorry to hear he’s ill, but I would guess the talk of people long gone is down to the dementia.
Some years before she actually died (with advanced dementia) my mother would often talk of a long ago (pre WW2) home and her parents, and want to go and visit them ‘because they must be getting old and could do with some help’. They had died over 30 and 50 years previously.
Another old lady in her care home, nowhere near death, would often very happily tell me that her mum and dad and grandparents were coming soon, and they were all going to the seaside together.
IMO it’s just a case of newer memories being lost. It’s been likened to a stack of bookshelves, oldest memories at the bottom, newest at the top, and gradually they’re all swept away, starting with the top.
For the same reason, people often eventually fail to recognise their own family members, even their spouses, presumably because they remember them - if at all - as much younger people.
My mother was frequently worried about ‘the children’ - I.e. me and siblings, by then all over 50! I was by then just a ‘nice lady’ who made her cups of tea and brought her chocolate.
But her failure to recognise me came very suddenly. One week her eyes would light up when she saw me coming - the next they were just blank.