Term used to describe the philosophic concept/idea that reality as we perceive it is not the 'true reality', but a shared make-belief acting as a layer to shield off true reality. Usually this make-belief reality, or virtual reality, is controlled by a malicious entity.
The concept stems from (Christian) Gnosticism, which resolved around the idea that we live in a world that isn't true, and that's created by a malicious god. The goal of gnostics is to break free from this world (and hence gain control of it).
The influence of Plato's cave allegory is clear in both gnosticism and the Matrix-movie, but with the significant difference that Plato's cave allegory meant was meant to embody the idea that reality as we perceive it is merely the shadow of the true reality, aka the world of ideas.
Woa, so gnosticism basically comes down to us being in the Matrix?