Wanted to chime in as a newbie, which had several breakthroughs on shrooms and acid.

First I have to mention that I live a live with a lot of meditation (now since 16 Years). I was actually inspired to do this after my second acid trip, where I said to myself: "It has to be possible to get into this state naturally, without any substance".
But I'm drifting off...

I see it from that perspective:
The drug by itself is just overloading or blocking the brain's functioning, so that it has more and more problems to stay coherent. By which exact mechanism this is done, is IMHO not really the interesting question (and also varies by the type of drug used). If the dose is high enough, the ego part of the brain is so malfunctioning that it stops to working properly. This is when the Ego-Death sets in.
Before the death often the EGO tries all it can do, to keep coherent, this is what often makes the trip go bad. As soon as you can let go, it's fine.

My experiences learned me this: With the help of meditation I can get easier and easier to this death-point, meaning you need less and less substance to do it. E.g. on acid I usually break through on around 50mcg.
And the vast difference is: The more substance that has been needed to kill the ego, the more problem you have to remember anything from the experience, as the brain was heavily malfunctioning.
E.g. from my first breakthrough (high dose shrooms) I couldn't take anything back but one sentence...I just remembered the tunnel, the light and then coming back again.
But after some years of meditation I almost remember everything from an acid breakthrough.

Also the pics you see remembering are IMHO the brain interpretations of what you experienced. But again. The more substance, the more malfunctioning the brain was during this time and the less the pictures stored are actually "correct" interpretations.
Additionally some experiences are just too much for the brain to understand. For it cannot understand infinity. Therefore it can only store some distorted interpretation, even if the brain would be 100% fine. Some things cannot be understood logically...

I see it from a viewpoint as in the indian scriptures. Basically all is consciousness, there's nothing else. But this is one giant consciousness which manages to make smaller identification units (e.g. called souls). The identification with the matter (which is also just consciousness) is so strong that such parts of the one consciousness can exist which do not even know anymore, that they are actually a part of this one consciousness.
Ok that probably seemed a bit strange.
I will make an example from one of my trips.
I got catapulted outside at the border of the Overmind (in Sri Aurobindo's term), where the material universe (form) starts it's existence.
There everything is a ocean of flickering lights. You can now focus your consciousness on a certain point in this ocean and you will see yourself at a certain place in space and time.
So basically past present and future is actually all at once. Only if you start focusing on a certain part you start to identify as an entity in time and space.
I could jump back and forth in time by identifying with different parts of this ocean. I could see my past and future. But what was interesting is, that this only worked in a certain margin. I think that the still non unified consciousness of me there has a certain vibratory pattern. And you can only jump and identify yourself to certain points if you can adjust your vibration to these patterns. That's why I couldn't jump far back and forth and couldn't identify with other beings.
Also this vibratory pattern decides the worlds you get more attracted. E.g. to certain beings.

As to go back to the title of the thread (Sorry again drifted off a bit):
I definitely think it isn't another "dimension". Well what do you mean by dimension?
I see it as in the indian scriptures, as what I experienced matches perfectly with this. BTW I had my first experiences in that way, before I knew anything about this system.
There are several levels of consciousness. The lowest level is the gross physical, where we think we live. Other levels have a higher vibratory frequency and therefore almost do not interact anymore. In other planes of consciousness there are the most interesting beings like faeries etc.. E.g. just the next plane is very close to ours. From there you can still see the gross physical but hardly interact. This was my experience doing OBEs. But you can see that what we think here, is actually creation in the higher planes. Every thought bears a being. Actually we are nothing but a thought pattern of the one consciousness.
So this is my view, and why I can hardly say it is another dimension. IMHO it's rather another plane of consciousness.

Well as a few others have said it's not that it works on actual serotonin but just the receptor sites and from what I know the way they work on the receptor sites is a complete mystery.

When you take something like LSD is replaces your serotonin with LSD because your brain thinks it's serotonin by its chemical structure. Well without the serotonin working on these receptor sites your brain begins to lose grip on perception because that's one of the functions of serotonin; not just for mood and happiness but your grasp on perception. But there is no "right" perception just the one your mind has created.
For biological and survival reasons your mind has helped create a baseline perception or "normal perception" so that we're not overwhelmed or distracted easily, etc..

If our minds didn't give us a baseline perception of some sort that would be an epic biological failure and would never work. I believe that's why things like LSA, Mescaline, Mushrooms, Iboga, DMT ect. work on serotonin receptor sites and move this bogus biological trick out of the way, these mental curtains to keep us alive and 'here' in consensual reality

These things exist in my mind because we as organisms have the right to at least know we have a baseline perception and that there is no one absolute perception or one right way to look at the world. So I guess what I'm trying to say is it's a biological reward imho.

This is pretty close to what I have come to conclude, though I come at it from the perspective of a scientist. In my view, the base level of reality is consciousness/information (in a physics sense), this is the hyperspace you experience on DMT. It must be this way because it is possible to imagine things that cannot exist in this physical universe (such as the concept of infinity). Like you say, there can only be one consciousness because otherwise there would be need for a medium where the many consiousnesses would exist, and therefore it would not be the base level of reality.

My quandary is how entities fit into this picture. If there is only one consciousness, what are they? It must be that the one consciousness is somehow able to divide its experience into a multitiude of different perspectives. Some of them are experiencing existence as matter (like us), and others exist as entities in the consciousness/information hyperspace.

I hypothesize that our physical universe is some sort of simulation embedded within this hyperspace whose purpose is to entertain the one consciousness with a myriad of adventures as physical beings. Special arrangements of matter that have evolved within this universe (brains) create localized points that attract a facet of the one consciousness (like a gravitational well in spacetime). Depending on the level of brain complexity, more or less consciousness is attracted. DMT, by disrupting normal brain function and deactivating the brain's control centers essentially removes this potential well and causes your facet of the one consciousness to be dispersed back into hyperspace to be reunified with its source. This is responsible for the sensation of suddenly remembering literally everything that ever could be imagined upon entering hyperspace, for a short time you become the one consciousness. When you return, all of that information slips out of reach and the illusion of physical reality is restored.

Fascinating, and it definitely resonates within.