A. Yes, it is just an illusion. The purpose of your meditation is to see the true-Self that is edgeless. That the true-Self is edgeless means that it has neither inside nor outside. Then, what are you going inside of? Anything with inside and outside is just an illusion.
Such phenomenon indicates that you are making illusions and are deluded by them. It happens when you miss your question, koan, or you cannot focus all your attention on your koan. Some people say they see something very holy-looking such as the Buddha or Bodhisattvas. Others say that they see something horrible such as monsters or ghosts. Whatever you may see and hear during meditation, they are all illusions created by your imagination, which are called Maras in Buddhism. You should be neither attracted by the former nor frightened by the latter. Refocus on your question if you happen to come across this situation again.
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