An illusion is a misinterpretation of a perception (cf. delusion, hallucination). Illusions occur in normal people when they are tired, inattentive, in conditions of poor illumination, or if there is sensory impairment. They also occur in disease states, such as delirium, and psychiatric disorders (affective disorders, schizophrenia).
Examples of phenomena which may be labeled illusory include:
Visual: metamorphopsia, palinopsia, polyopia, telopsia, Pulfrich phenomenon, visual alloesthesia
Auditory: palinacusis Vestibular: vertigo
Tekin S, Cummings JL. Hallucinations and related conditions. In: Heilman KM, Valenstein E (eds.). Clinical neuropsychology (4th edition). Oxford: OUP, 2003: 479-494