Scriptures say that reality is eternal, unchangeable, has no distortion and is beyond distinctions of time, space and individuality.
The Hiranyagarbha or primordial seeds of life that self-emanated with the support of the five elements – ether, air, fire, water and earth – came to be this vast universe. To understand this better we have to know about transformation of matters.
Chethana vastu or that which has life, which has chaitanya or consciousness, will never get transformed. Any jada vastu or that which is lifeless will get transformed. The body is a chethana vastu till the life breath is present, but will get transformed once the chaitanya is lost. Body will get mixed with mud and could become a plant one day. If we examine a plant in the pot, the plant will use up all the mud and grow, one day if we happen to re-pot it we observe that only roots are present; very little soil is left in the pot. What happened to the soil? Yes, the soil has been transformed into the plant. Are the soil and the plant different? No, they are one and the same in different name and form.
Reality can be viewed at three levels: Paramarthika or the absolute, Vyavaharika or what is relative and Pratibhasika or the illusory. Reality of the non-dual whole which is the infinite non-dual consciousness of being, 'I am' is the absolute reality. This is Brahman, the primordial and that which has no distortion with respect to time, space and individuality. So Vedanta tells all that is present is Brahman and that Brahman is reality.
Until such time as when we come to know absolute reality, the empirical world is projected in all its diversity. This makes us feel the existence of the relative reality. Anything that is relatively real appears to be real at certain times and under certain conditions, and it ceases or changes its appearance at other times and under other conditions. Since it is not real at all times, it is not real even when it appears to be real. Relative reality is experienced by all as the same.
Erroneous imagination of something which does not exist or illusions and hallucinations which have no existence apart from the mind that imagines them is illusory reality.
Let us consider clay and call it Brahman, the absolute reality. A potter makes a pot out of it. Now the pot becomes relative reality. Even though it is clay we call it pot since we see it in the form of a pot. Once the pot is broken it will go back to its original form, clay. An individual who has purchased the pot will think he can make use of it by cooking rice in it. This is illusory reality. This is purely one's own imagination, since one can cook rice or boil water, or make tea or the pot may even crack before one puts it on the fire.
In Vedanta, the oft-repeated analogy is of the rope and snake. Originally the material of the rope is Brahman – this is absolute reality. Due to its appearance in the form of a rope we call it rope and this is relative reality. In darkness if someone mistakes the rope to be a snake, this is illusory reality. One can imagine a rope to be a coiled snake, piece of stick, or a crack in the ground and this is left to the individual's imagination.