What exactly are conditioned phenomena (saṃskāra-dharma)?

All conditioned dharmas are false appearances conjured up illusorily by the tathāgatagarbha. In order to communicate and express themselves fully, humans have established corresponding names for these dharma-marks. Even without names, discrimination is still possible; it is only that without names, it becomes inconvenient for sentient beings to communicate verbally, and they cannot make clear to one another what each is referring to. Animals never establish names and marks for conditioned dharmas, yet they discriminate all the same; however, they are unable to communicate with one another—understanding can only be tacit, never conveyed in words.

Through studying the Dharma and cultivating practice, by contemplating and engaging in contemplative practice (vipaśyanā-caryā) in accordance with reason upon marks and names, one will attain wisdom of suchness (yathābhūta-jñāna), discriminating and clearly knowing the actual substance and meaning of marks and names as they truly are, deeply understanding the illusory and unreal nature of conditioned dharmas, so that the mind no longer stirs and turns because of conditioned dharmas, but remains immovable in suchness like true suchness (tathatā). In this way, the mind of the seven consciousnesses will draw closer and closer to true suchness, becoming more and more like true suchness, until in the end the mind becomes as pure as true suchness, and the practice of cultivation is complete.

The trichiliocosm (three-thousandfold great world) manifested by the Buddhas and Bodhisattvas is a conditioned dharma—what exactly is it, or is it nothing at all? These conditioned dharmas are all generated from the formless and markless seeds within the tathāgatagarbha; they are empty and illusorily transformed, with no substantive dharma existing, and therefore one cannot say what these conditioned dharmas are. But neither can one say that these conditioned dharmas are nothing at all, because these conditioned dharmas still exist in terms of their marks, and they have their corresponding illusory functions on the level of worldly dharma. Although these functions are also illusorily conjured, and in reality are entirely the functions of the tathāgatagarbha, these functions do indeed have their effects—that is why they are called conditioned dharmas; otherwise, they would be unconditioned dharmas (asaṃskṛta-dharma).

Conditioned dharmas are called conditioned dharmas precisely because they possess the dharma-marks and functions of the worldly realm. Thus these conditioned dharma-marks are given names such as "such-and-such," for the convenience of discriminating and grasping them. A person of wisdom clearly understands the true face of these conditioned dharmas; although he still needs to make use of these conditioned dharmas, he uses them without the slightest hindrance or discord, with a mind at ease, without greed or anger, and without partial attachment. Everything he does violates neither the ultimate truth nor the conventional truth, and with great wisdom he takes up the Bodhisattva's work of benefiting sentient beings.