Either this is VR NTR with herself, or this is supposed to be what's happening and not what she's seeing.
It's gotta be the NTR, though.

I thought this was a reference to the FGO VR game. But the commentary doesn't say anything about that.

It's a reference to this: post #2942885

It's even clearly Riyo's style, and the commentary mentions Riyo, as well.