Until we limit the mind to physical entity ,we are in clutches of physicality/egocentric. All that ego game goes on within the mind(universe or illusion) . The pain and pleasure , birth life ,death and the world are within the illusion. Until and unless one does not become aware of the fact that, his daily life and his individuality is part of the illusion, he will remain deluded by illusion by experiencing it as reality.
The one who is aware of the truth within the illusion, sees the illusion [three states] as passing show. Thus, he is fully aware of the fact that, the individual happenings within the waking or dream is nothing to do with his true identity, which is the formless soul/true self. The man of truth knows how to play the game with the illusion inwardly and remain as commoner outwardly without affecting his physical life within the illusion. Because he is fully aware of the fact that, the experience of diversity(waking or illusion) is nothing but the consciousness, thus the mind and soul are one in essence.
The people who think the worldly life as reality have the fear of losing their individuality because they are ignorant of the fact that, their daily living and the world dependent on the formless true identity(soul or consciousness) for their existence, not on the physical identity(body or ego) and the world. Without the consciousness the physical identity(body or ego) and the world ceases to exist . Therefore , there is need to understand assimilate what is what , before coming to any conclusion on the base of the false identity or ego.