Green’s Dictionary of Slang

(US) to daydream, to drift off, esp. when under the influence of drugs.

1968		‘Sl. of Watts’ in Current Sl. III:2.
1979		Eble Campus Sl. Mar. 7: space – to be insensitive to what is happening.
1983		T. White Catch a Fire 251: Rattled West Indian immigrants swore off ganja [...] convinced they had somehow spaced out and missed a year of Wailers 45s.
1996		S. Frank Get Shorty [film script] Yo, Chili, you’re spacin’.
2004		Mad mag. June 37: Man, I totally spaced.
2005		L. Theroux Call of the Weird (2006) 34: ‘Oh yes,’ he said, recovering himself. ‘I remember. I’m sorry, I spaced out a little there.’.