Illusions die when [targeted] by spells or abilities.
Illusions die immediately if they are targeted by a spell or ability. At the moment they are targeted, they die (and go to their owner's discard pile). That means if an effect would target an illusion and deal 3 damage to it, or target it and put a rune on it, the illusion is already dead and gone before the effect happens. It never actually takes the 3 damage or gets the rune in those examples. — Sirlin, 03/11/16
Attacking an Illusion does not automatically kill it. Illusions only immediately die if they are targeted by a spell or ability. — Sirlin, 03/11/16
"Illusion" is a subtype that a unit can have, it's not an ability. That means Spectral Hound, for example, does not have any abilities if Midori's middle ability checks for things "with no abilities". — Sirlin, 03/11/16