The basis of Buddhism is that we all suffer from delusions, and only by reducing, and eventually completely removing those delusions, will we find happiness.
Most people, on first meeting these teachings, are likely to be extremely skeptical. After all, most of us don’t see pink elephants, think that we’re Napoleon, or believe politicians' promises. So in what way are we deluded?
The basic delusion of ‘inherent existence’ or ‘svabhava’
The basic delusion is that we believe that all substances, objects and people have an unchanging, stable, defining nature ‘from their own side’ that makes them what they are. This delusion of intrinsic nature, is known as ‘svabhava’ (Sanskrit for ‘inherent existence’), and can be refuted philosophically by the 'emptiness' argument, and scientifically by recognising the process nature of reality.
In Buddhist philosophy, all functioning phenomena exist dependently upon (i) their causes, (ii) their parts and (iii) the mental designation by an observer. There is no extra or more fundamental ‘essence’ that makes a thing what it is beyond or beneath these three attributes of existence.
Although we may understand intellectually that inherent-existence is impossible, nevertheless we still have great difficulty of ridding ourselves of this delusion. The reason that svabhava is so deep-rooted, pervasive and systematic is that our brains and perceptual systems have evolved to use svabhava as a useful working approximation (or ‘conventional truth’) to represent commonsense reality.
This ‘working approximation’ functions quite well in our everyday life, and only breaks down when we analyse phenomena in depth, either philosophically, or scientifically as with particle physics, where we are forced to realise that the observer is an inextricable part of the system.
Why is the delusion of inherent existence so strong?
Our brains have evolved to present a useful model of reality to our minds as quickly and efficiently as possible. To do this they must sample reality, rather than monitor it continuously. By analogy, think of a movie camera that takes a series of frames as samples of continuous reality, or a CD that samples a continuously varying soundtrack as a series of discrete numbers. Sampling is essential because continuous monitoring would produce an information overload.
Our brains do a similar sampling job, along spatial and conceptual dimensions as well as along temporal ones. Hence we normally see the universe as composed of discrete things, rather than continuously varying processes.
But if we analyse carefully, and on a long enough timescale, we realise that everything in the universe is impermanent, and part of continuously changing processes. Even the universe itself is a process, starting out from the big bang. At the other end of the scale, subatomic particles are processes - continuously varying wavefunctions, which only appear as distinct particles at the moment they are sampled.
However, our brains haven’t evolved for philosophical reflection. They have evolved to present a workable view of reality which identifies threats, opportunities and resources as rapidly as possible. Natural selection cannot select directly for true beliefs, but only for advantageous behaviors.
So the brain is giving us a picture of the world that is merely fit for purpose, rather than one that represents some true underlying reality. This is the explanation for the two truths - conventional truth versus ultimate truth. Conventional truth applies to those entities in the world that are stable and persistent for long enough for us to regard them as things. The ultimate truth is that all those things are actually impermanent when viewed on a long enough timescale, and have no defining existence within themselves.
As Wiki puts it:
Ignorance isn't just an inability to apprehend the truth but an active misapprehension of the status of oneself and all other objects—one's own mind or body, other people, and so forth. It is the conception or assumption that phenomena exist in a far more concrete way than they actually do.
Based on this misapprehension of the status of persons and things, we are drawn into afflictive desire and hatred [i.e. attachment and aversion]... Not knowing the real nature of phenomena, we are driven to generate desire for what we like and hatred for what we do not like and for what blocks our desires. These three—ignorance, desire, and hatred—are called the three poisons; they pervert our mental outlook.
Conventional truth enables us to go about our daily business. Ultimate truth enables us to perform philosophical analysis. For further discussion on this topic see Evolution, Emptiness and Delusions of the Darwinian Brain.