I think "illusion of knowledge" refers to people who THINK they KNOW something without any factual evidence to back it up. If you base your actions off thinking you are right when you are in fact wrong, you not only endanger yourself, you endanger everybody you come into contact with.
That is just a small part of it. we all need to find it. Find out to know about it instead of just guessing. For example, What " I think" does not mean I know, Try to know instead of just using "I think, or I believe". If someone thinks fiction is a fact that is an illusion, If something that is stupid and thinks that is smart that is an illusion. If we respect something that is stupid our respect is an illusion, no excuses for it.