Mahat-tattva is a shadow of pure consciousness from where the false ego of the living entity is generated.

The mahat-tattva is the total consciousness because a portion of it is represented in everyone as the intellect. The mahat-tattva is directly connected with the supreme consciousness of the Supreme Being, but still, it appears as matter. The mahat-tattva, or shadow of pure consciousness, is the germinating place of all creation. It is pure goodness with the slight addition of the material mode of passion, and therefore activity is generated from this point.

The mahat-tattva is the via medium between pure spirit and material existence. It is the junction of matter and spirit wherefrom the false ego of the living entity is generated. All living entities are differentiated parts and parcels of the Personality of Godhead. Under the pressure of false ego, the conditioned souls, although parts and parcels of the Supreme Personality of Godhead, claim to be the enjoyers of material nature. This false ego is the binding force of material existence. The Lord, again and again, gives a chance to the bewildered conditioned souls to get free from this false ego, and that is why the material creation takes place at intervals. He gives the conditioned souls all facilities for rectifying the activities of the false ego, but He does not interfere with their small independence as parts and parcels of the Lord.

A pure living entity in his original spiritual existence is fully conscious of his constitutional position as an eternal servitor of the Lord. All souls who are situated in such pure consciousness are liberated, and therefore they eternally live in bliss and knowledge in the various Vaikuntha planets in the spiritual sky. When the material creation is manifested, it is not meant for them. The eternally liberated souls are called Nitya-muktas, and they have nothing to do with the material creation. The material creation is meant for rebellious souls who are not prepared to accept subordination under the Supreme Lord. This spirit of false lordship is called false ego. It is manifested in three modes of material nature, and it exists in mental speculation only. Those who are in the mode of goodness think that each and every person is God, and thus they laugh at the pure devotees, who try to engage in the transcendental loving service of the Lord. Those who are puffed up by the mode of passion try to lord it over material nature in various ways. Some of them engage in altruistic activities as if they were agents appointed to do good to others by their mental speculative plans. Such men accept the standard ways of mundane altruism, but their plans are made on the basis of false ego. This false ego extends to the limit of becoming one with the Lord. The last class of egoistic conditioned souls–those in the mode of ignorance–are misguided by identification of the gross body with the self. Thus, all their activities are centred around the body only. All these persons are given the chance to play with false egoistic ideas, but at the same time, the Lord is kind enough to give them a chance to take help from scriptures like Bhagavad-gita and Srimad-Bhagavatam so that they may understand the science of Krishna and thus make their lives successful. The entire material creation, therefore, is meant for the falsely egoistic living entities hovering on the mental plane under different illusions in the modes of material nature.

False ego interacting with the different modes of material nature is the source of all materials in the phenomenal world. The chief function of the false ego is godlessness. When a person forgets his constitutional position as an eternally subordinate part and parcel of the Supreme Personality of Godhead and wants to be happy independently, he functions mainly in two ways. He first attempts to act for personal gain or sense gratification, and after attempting such fruitive activities for a considerable time, when he is frustrated he becomes a philosophical speculator and thinks himself to be on the same level as God. This false idea of becoming one with the Lord is the last snare of the illusory energy, which traps a living entity into the bondage of forgetfulness under the spell of false ego. The best means of liberation from the clutches of false ego is to give up the habit of philosophical speculation regarding the Absolute Truth. One should know definitely that the Absolute Truth is never realized by the philosophical speculations of the imperfect egoistic person. The Absolute Truth, or the Supreme Personality of Godhead, is realized by hearing about Him in all submission and love from a bona fide authority who is a representative of the twelve great authorities mentioned in the Srimad-Bhagavatam. By such an attempt only can one conquer the illusory energy of the Lord, although for others she is unsurpassable, as confirmed in Bhagavad-gita (7.14).

Source: A.C. Bhaktivedanta Swami Prabhupada (2014 edition), “Srimad Bhagavatam”, Third Canto, Chapter 5 – Text 27 to 31