How then does the mistaken idea, that things exist from their own side, operate? Whatever appears to the mind appears as if it existed truly from its own side. ...Now if the object existed as it appears to you, then, when you searched for it, you could actually find a real [object]. So, we must ask ourselves whether or not this object, when searched for, is to be found or not. If the object is not found when it is searched for, we must conclude that it does not exist from its own side, that when the label is applied to its basis, it is not so labeled because the basis somehow bears within it something which is the object. At this point, one must conclude that the object does not exist as it appears to, but then, one may wonder whether it exists at all.
Things, however, are not utterly non-existent. They do exist nominally. So things do exist, but they do not exist from the side of the basis of the label. And hence, though they do exist, because they do not exist within the object itself, they must exist only as they are labeled by the subject (the conceptual mind, for example). There is no other way for the object to exist apart from the way it is posited by conceptual thought. This is then what we mean when we say that all phenomena are merely labeled by conceptual thought. However, things do not appear to us as if they were mere conceptually labeled entities. Instead, they appear as if they existed from their own side. Therefore, it is a mistake to think that things exist as they appear.
--from Answers: Discussions with Western Buddhists by The Dalai Lama, edited by Jose Ignacio Cabezon, published by Snow Lion Publications