illusion is something that tricks the eye because it thinks it sees something but doesn't and it fools the brain. like an escher print where the walls are really the pillars. your brain goes crazy trying to figure it out.
hallucinations are waking dreams. your mind generates it's own imagery and places dream into reality. it's kind of like hypnogogic imagery only your totally awake.
Illusions are what many so called artist try to do when they advertise a digital manipulation as an oil, watercolor or acrylic painting. a hallucination is what one must be doing if one purchases a print of said manipulation believing it to be of a traditional work without proper research or provenance.
Hallucination shows you unexpected, fantastic pictures instead of reality, against your will, unconsciously. It is a symptom of some brain disease, or at least a good signal to check your mental health. Illusion is a normal reaction to some deceptive realities, which may prompt you willingly construct fantastic pictures in your imagination, or to make wrong conclusions about real objects.
Similarities - wrong imaginative pictures. Differences - disease vs health.
Yesterday, when driving my car, I had an illusion as if I knocked down a drunk man, who jumped from pavement across my road unexpectedly. Fortunately I just lost him from my field of vision for a moment. I would not say the moment had any softer overtones!
I'll change your question to the difference between an illusion and a dream.
(Most of us dream, and remember our dreams frequently. Few of us hallucinate except if feverish or drugged.)
A dream comes entirely from our brain, and usually has no immediate basis in physical reality.
An illusion is based on actual perceptions and sensory input, but it is misinterpreted by our brain.
When we experience an illusion we think that what we see, or otherwise sense, is something other than what it actually is.
A hallucination is a blend of the two. Usually, the person experiencing a hallucination is in a waking state, and seeing things that are there, but is adding to that a dreamlike false-reality created entirely in his brain.
At least that's what the elephant sitting on my shoulder is whispering into my ear.