When planning on how to go after her rival Olivette, Rowena suggested using the illusion spell to create a distraction so that they could kill her. When the Winchesters called Crowley to help them kill Cain, he used the illusion spell to create a realistic illusion of Austin Reynolds to draw Cain into a devil's trap. This plan worked and Cain was trapped allowing Dean the chance to kill him with the First Blade.
The exact procedure is unknown but it requires a small stone called the Rune of Amarath which casts an illusion. The caster may have to stay in proximity to the illusion but how close is unclear. Once the illusion is discovered, it is then dispelled by the caster.