False ego is the mistaken assumption that we are our bodies.
The reality is, aham brahmasmi: "I am spirit." Without that understanding, we think, "I am this body," and that our temporary bodily labels—white, black, tall, short, young, old, man, woman—apply to us.
The Bhagavad-gita explains that the self—atma—is eternal and conscious, while matter is temporary and unconscious. The self is called "superior energy," while matter is called "inferior energy." False ego is the most subtle feature of the inferior energy. It's the the very point of contact between spirit and matter. It's what keeps us tied to the inferior energy.