We live in an illusion, a simulation created by nonphysical electromagnetic waves collapsing into material reality, where your soul is trapped inside an energetic container that we call matter. There, it learns the lessons of Good and Evil necessary for its evolution. That is why the body is made of earth/dirt/matter, while the soul is made of fire, which is plasma.
In Hinduism and Buddhism, this is represented by the Bhavachakra, or Wheel of Life, which depicts samsara, the cycle of death and rebirth in which the soul is “trapped” until it escapes the wheel after acquiring the knowledge of Good and Evil and attaining wisdom. The three poisons at the center of samsara are actually the northern constellations Draco, Cygnus, and Ursa Major, constantly chasing one another in a circle, symbolizing both the passage of time and the endless, repeating cycles. The twelve outer sections represent the twelve zodiac constellations.
So yes, we live in an illusion, a simulation, but not an illusion created by AI, as in The Matrix. It is an illusion created by God for the purpose of the soul’s evolution.