In a wider, more informal context, an allusion is a passing or casually short statement indicating broader meaning. It is an incidental mention of something, either directly or by implication, such as "In the stock market, he met his Waterloo."
In the most traditional sense, allusion is a literary term, though the word has also come to encompass indirect references to any source, including allusions in film or the visual arts. In literature, allusions are used to link concepts that the reader already has knowledge of, with concepts discussed in the story. In the field of film criticism, a film-maker's intentionally unspoken visual reference to another film is also called an homage. It may even be sensed that real events have allusive overtones, when a previous event is inescapably recalled by a current one. "Allusion is bound up with a vital and perennial topic in literary theory, the place of authorial intention in interpretation", William Irwin observed, in asking "What is an allusion?"
Without the hearer or reader's comprehending the author's intention, an allusion becomes merely a decorative device. Allusion is an economical device, a figure of speech that uses a relatively short space to draw upon the ready stock of ideas, cultural memes or emotion already associated with a topic. Thus, an allusion is understandable only to those with prior knowledge of the covert reference in question, a mark of their cultural literacy.
The origin of allusion is in the Latin verb ludere, lusus est "to play with, jest." Recognizing the point of allusion's condensed riddle also reinforces cultural solidarity between the maker of the allusion and the hearer: their shared familiarity with allusion bonds them. Ted Cohen finds such a "cultivation of intimacy" to be an essential element of many jokes. Some aspect of the referent must be invoked and identified for the tacit association to be made; the allusion is indirect in part because "it depends on something more than mere substitution of a referent."
The allusion depends as well on the author's intent; a reader may search out parallels to a figure of speech or a passage, of which the author was unaware, and offer them as unconscious allusions—coincidences that a critic might not find illuminating. Addressing such issues is an aspect of hermeneutics.