"First, the assumption is implicit that what God has Created can be changed by the mind of Man."
So even before having any sense of what you could change God's creation INTO, you started out with the idea that you COULD change God's creation at all. That includes the belief you can change God himself, change yourself, or change anything else real. This must include the 'mad idea' that things which literally are permanent and CANNOT be changed, can be changed. So this represent the first slip into believing something false, believing the impossible is possible, and thus denying reality.
"Second, the concept that what is perfect can be rendered imperfect (or wanting) is intruded."
So now having decided that you can change things that are permanently unchangeable, you start to explore what it can be changed INTO, and thus get this idea that the perfect can be made to be imperfect. That there can be something lacking, needs arising, problems developing, a sense of the absence of God growing.
"Third, the belief that man can distort the Creations of God (including himself) has arisen, and is tolerated."
This now includes the idea that even your own self, which God created to be permanent, is changeable, can be made to be imperfect, taken away from its perfection, converted into something else. And that YOU can be the one to do this, therefore CAUSING your own self to be whatever you decide to change it into.
"Fourth, that since man can create himself, the direction of his own creation is up to him."
So now you set about the belief that because you can change your own self, can make yourself imperfect, and can literally 'redefine' who and what you are "at will", you can determine the "direction of your own creation", ie whether or not you are created at all (life vs death), and that if you do continue to exist, what 'form' you take or what is true of your nature or how you function. You think you now have the power to "create yourself" or re-create yourself, in whatever way you please, which has to automatically deny the Father's role as your Creator.
"These related distortions represent a picture of what actually occurred in the Separation. None of this existed before, nor does it actually exist now."
You become "ego", by having taken on this position of believing you created yourself, God is not your father, God is absent, you have control over yourself, you can define yourself to be whatever you want to be, you are "constantly changing", you can destroy yourself, you have an ability to determine what you are, and that you have the power to redefine what is true and what is real. This is essentially what egotism is. It's this 'logical conclusion' we've come to on the basis of believing the permanent can be changed, and now we find ourselves in a state of constantly denying what's permanently real and trying to constantly change it into something that it's not.