Discuss the disparity between illusion and reality in the book.

I think this question has much to do with the theme of identity. Many characters often don disguises. For instance, Sir Launcelot frequently hides his identity so that he can solicit jousts with knights who might otherwise be too frightened to fight him. Mistaken identity in Le Morte d’Arthur often results in tragedy, as was the case for the brothers Balin and Balan. Merlin is perhaps the most persistent in his attempt to conceal his identity, mostly from Arthur, as he transforms into old men or young children, usually to teach the King a lesson. The regularity of disguise suggests that characters often wish freedom from an identity that otherwise too fully limits them in the eyes of others. Check out "identity" in this link:

http://www.gradesaver.com/le-morte-darthur/study-guide/major-themes/