What is meant by "all dharmas are consciousness-only"?
Nothing whatsoever belongs to us; things can only be used by us, and only for a period of time, yet we cannot hold on to them. All external dharmas will perish, and the self, the body of the five aggregates, will also perish—who can grasp anything? We will die, the world will disappear, and nothing is reliable. Even if we never died, the world would still be destroyed; when the earth is destroyed, when the universe and empty space are all destroyed, the physical body would have no space in which to dwell. Therefore, we cannot cling to any dharma, including ourselves; there is nothing we can hold on to. Gold, silver, and jewels are also composed of the four elements—earth, water, fire, and wind—and are also manifested by the tathāgatagarbha; when the conditions cease, they vanish. Even the trichiliocosm (three-thousandfold great world) will be annihilated.
If there were no earth element, from where would that hard nature come? If there were no tathāgatagarbha, there would be no earth element. All dharmas are manifested by the tathāgatagarbha, and the source of all dharmas is the tathāgatagarbha. Knowing that all dharmas are illusory—this is what is called "all dharmas are consciousness-only."
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