Use allusion when you want to suggest or hint at something indirectly through an intelligible reference. Writers often use allusions to connect with their audience by bringing up points of common cultural knowledge or shared experiences. Allusions rely on the reader or listener recognizing the reference to add depth to the writing or conversation.

The word illusion should be used when referring to a false perception or a deceptive visual experience. It can also be employed abstractly to describe false beliefs or expectations. Illusions play on the senses and can be created intentionally, as in magic tricks, or occur naturally, like a mirage in the desert.

Allusion and illusion are both nouns but differ significantly in their meaning and context. Allusion is a noun describing an indirect reference, usually literary, used to subtly point to a piece of knowledge. It relies on the audience's familiarity with the subject. Illusion, also a noun, describes a deceptive visual or mental impression, indicating something that is unreal or misperceived. Remember that allusion 'alludes' to something, while illusion creates a deceptive illusion of reality.