False ego is the cause of the material creation

From Srila Prabhupada's purport to SB 2.25.25

"The five elements, namely sky, air, fire, water and earth, are all but different qualities of the darkness of false ego. This means that the false ego in the sum total form of mahat-tattva is generated from the marginal potency of the Lord, and due to this false ego of lording it over the material creation, ingredients are generated for the false enjoyment of the living being. The living being is practically the dominating factor over the material elements as the enjoyer, though the background is the Supreme Lord. Factually, save and except the Lord, no one can be called the enjoyer, but the living entity falsely desires to become the enjoyer. This is the origin of false ego. When the bewildered living being desires this, the shadow elements are generated by the will of the Lord, and the living entities are allowed to run after them as after a phantasmagoria."

Thus:

• With the glance of Mahavishnu which comprises of the living entities, time and karma the agitation in the mahat tattva starts as we read in this post From Pradhana to Mahat Tattva - Characteristics, differences and Transformation.

• Further transformation occurs because of the presence of the false ego- As Srila Prabhupada explains in this purport that "This means that the false ego in the sum total form of mahat-tattva is generated from the marginal potency of the Lord, and due to this false ego of lording it over the material creation, ingredients are generated for the false enjoyment of the living being."

• Thus the false ego in the mahat tattva is that of the marginal potency - the jiva who has desired to enjoy separately from the Lord.
• Thus due to the agitation of the glance of Maha Vishnu false ego is produced(from UHLF -Page 352 Navakishori dd - but it has already with the living entity??) and manifests in the three modes, goodness, passion and ignorance.
• Gradually those forms of false ego transform further.
• From False Ego in the mode of ignorance(tamas- full display of material creation under the spell of darkness of ignorance.Verses 2.5.26-29)
• Sky (ether) is generated along with sense object sound
• From Sky the Air element is generated along with sense object touch
• From Air the Fire element is generated along with the sense object shape
• From Fire the Water element is generated along with the sense object taste
• From Water the Earth elements is generated along with the sense object taste
• Each element contains within it all the sense objects previously generated
• From False ego in the mode of goodness(Vaikarika- the neutral stage of creation) Verse 2.5.30:
• The mind is generated along with the 10 demigods who control the bodily movements.e.g controller of directions, air, sun-God, father of Daksha prajapati,the Asvini Kumars, the fire God,the King of heaven, the worshipable deity in heaven, the chief of the Adityas and Brahmaji, the Prajapati.All come into existence.
• Same is mentioned in verse 3.5.30:"The false ego is transformed into mind by interaction with the mode of goodness. All the demigods who control the phenomenal world are also products of the same principle, namely the interaction of false ego and the mode of goodness."
• From False Ego in the mode of passion(tejas - the initiative of creation) From 2.5.31:
• intelligence, prana(the life force)
• five knowledge acquiring senses- eyes, ears, nose, tongue and skin
• five working senses - voice, legs, hands, genitals, anus
• Also mentioned in 3.5.31: "The senses are certainly products of the mode of passion in false ego, and therefore philosophical speculative knowledge and fruitive activities are predominantly products of the mode of passion."

Its interesting to note that Srimad Bhagavatam says that the false ego is the cause of this false material creation  and it also explains in the 12th canto that the death of the false ego is the Ultimate Annihilation of the material creation. See the link below for the post on this topic.

Death of the false ego - the Ultimate Annihilation

Having understood this how should we move about in this material world:

can be read here as explained by Suta goswami