Question: Whenever I hear someone like, say, Daniel Dennett say that consciousness is an "illusion", I'm always left pretty much stumped. Firstly, both the terms "consciousness" and "illusion" are generally left undefined, although this is more apparent with the term "illusion". With this, I have to use the default definitions of these terms, "consciousness" being a somewhat self-explanatory "state of conscious awareness", and "illusion" being "a delusion of some sort". This is really where the main problem arises for me. How can one claim that consciousness is an illusion when the concept of "illusion" requires a subject to be deluded, which the original claim actively denies the existence of? Granted, this subject doesn't have to be an "I", but the denial of any decieved subject at all seems to negate the argument itself.

The other problem I have with the claim is that it seems to contradict the fairly self evident claim that, as Nietzsche put it, "It thinks, therefore it is".

Is the claim really as nonsensical as it seems, or am I missing something big? Perhaps the definition of a term or multiple terms?

Answer: 
Your scepticism of Dennett is well-grounded. Claims similar to Dennetts were given by Skinner under the rubric of behavioral psychology where one supposed thinking things (*res cogitans*) were merely things, that is automatons, and one was not supposed to ask a man about his inner self, his *telos* or his intentions, or indeed how things were going with him, as one was supposed to merely observe his actions, his gestures, his attitudes and then tell him truly how things were going with him, his intentions, his purposes. 

These claims were blown apart by Chomsky who pointed out the chicanery of supposing human beings were to be studied as though they were merely objects of the disinterested scientific gaze - like rocks or laboratory rats. The chicanery goes deeper as it also sullies the good name of science by a methodology that simply doesn't stand up to any scrutiny. Likewise Dennett is sullying the good name of philosophy by dogmatically flogging a dead thought to a coterie of admirers who should know better - but don't - and to a larger audience who do know better but are cowed or over-awed by his linguistic gymnastics. 

Every language under the sun has the word 'I'. Self-awareness, self-consciousness exists. It's not an illusion. The only illusion here is that Dennett is doing good philosophy when he's doing bad philosophy.
When I run across problematic statements of this sort, I always prefer to follow Wittgenstein and look for the error in language that lies behind it. This is precisely the kind of 'philosophy' he thought needed therapy more than analysis.

The first step in that Wittgensteinian therapy is to step back and consider what *purpose* this claim has in Dennett's worldview. I don't mean to ask what the claim *means*, per se. Instead, I want to think of this claim as a move in, say, an abstract, philosophical game of chess, and ask what line of progression this claim is meant to block, or what intellectual territory it is attempting to claim. Looked at that way, the purpose is almost self-evident: the concept of 'consciousness' — ill-defined as it is — has long been associated with metaphysical and religious concepts like God and the soul and moral behavior. Disposing of consciousness immediately undercuts a wide range of philosophical arguments from theology, moral philosophy, and social theory. Since Dennett's *raison d'être* has always been anti-Abrahamic anti-theism, this kind of claim makes perfect practical sense. Whether it makes *philosophical* sense is almost irrelevant, because the position is too useful to the ultimate goal of the intellectual contest to be given up without a fight. This is why he settles on the idea that consciousness is an 'illusion': he cannot deny that we experience something we call consciousness, so instead he tries to pry it away from any direct ontological referent and reconstruct it as an emergent phenomenon of interconnected organic systems. 

Of course, this is just scientism: speculative philosophy based on an over-extension of scientific observations. 'Consciousness is an illusion' is no more empirically verifiable than 'consciousness is the product of a divine soul'. But even as mere scientism it creates enough ambiguity to undercut religious certainty on the matter, so it serves that purpose well.

The therapy in this case is to recognize that neither Dennett nor his opponents have any idea what consciousness *is*, but all acknowledge that the term points at *something*. The rest is merely wrangling over lexical issues: efforts to assert one formulation or another as *a priori* true. We can (if we choose) skip all that as contested territory, and move forward to actual substance of the game, which is over the sociopolitical balance of power between religious and secular segments of modern society.