From Tar Valon Library
Illusion is a talent of the One Power, lost since the Age of Legends, until Elayne and Nynaeve learned it from Moghedien (LoC, Prologue) that allows an Aes Sedai to disguise themselves. Though they are most successful if the person stays close to their normal image (ACoS, Ch. 21), it is possible to produce one markedly different from their normal appearance, such as Lanfear when disguised as Keile Shaogi (TSR, Ch. 36). If a person tries to touch the weave, it is not solid, only the most subtle of illusions would not fail in those circumstances (ACoS, Ch. 6). It is related to the Mirror of Mists which allows an Aes Sedai to appear much larger than normal, and was not lost during the Breaking (ACoS, Ch. 40). When illusion is done with an inverted weave, the disguise is complete as other Aes Sedai would not be able to detect it.
Instances when Illusion is is used
Lanfear as Selene (TGH, Ch. 16).
Lanfear as Keile (TSR, Ch. 36).
Lanfear as Sylvie (TDR, Ch. 27).
Elayne uses it on Nynaeve while drunk (ACoS, Ch. 21).