You alone are the one pure awareness in which the whole universe appears, like a mirage in water
The mirage image makes a precise point: the world isn't declared fake, only its apparent separateness from the awareness perceiving it is denied.
A mirage is not nothing — something is genuinely perceived — but what is perceived, water at a distance, does not exist as it appears, namely as a separate, substantial thing at that location. Ashtavakra applies the same logic to the universe appearing within awareness: the world is not being denied outright, but its apparent separateness from the consciousness in which it shows up is being denied. This is a subtler claim than simple illusionism, and it anticipates the more developed treatment of appearance and reality carried by the ocean-and-wave imagery of later chapters. Awareness itself, unlike the mirage's water, is never in question — it is the one constant across every appearance, however things shift.
Ashtavakra Gita