The Indians, in asserting the non-existence of every term in possible experience, not only free the spirit from idolatry, but free the realm of spirit (which is that of intuition) from limitation ; because if nothing that appears exists, anything may appear without the labour and expense of existing.........(from Chap.VIII Scepticism and Animal Faith
Santayana’s characterisation of Vedanta has been informed by the customary imprecision of Indian commentators and perhaps a tendency to draw the sceptical conclusion of the argument from illusion when presented with the snake/rope analogy. Things do exist but they exist as an appearance or manifestation. They do not have a free-standing reality, their reality is dependent or contingent. They have no necessary existence. When the rope appears as a snake this appearance has its reality in the substratum of the rope. It is also the case that the rope could not appear as a snake unless there were snakes in reality. The unreal snake has as counterpositive (pratiyogin) the real snake. In this way illusion has a basis in reality, it does not signify pure non-existence. There is a real substratum i.e. the rope and a real snake as a counterpositive.
The other thing that is forgotten in relation to Advaita Vedanta is that perception is taken to be veridical unless there is some defect in the conditions in which perception takes place. So given good sight in clear daylight and sobriety I can say with assurance ‘that’s a tree in the yard’. I can’t recall any discussion of absolutely sceptical brain-in-vat scenarios in which illusion is incorrigible.
It is the Indians who have insisted most sincerely and intrepidly on the non-existence of everything given, even adjusting their moral regimen to this insight. Life is a dream, they say : and all experienced events are illusions. In dreaming of nature and of ourselves we are deceived, even in imagining that we exist and are deceived and dreaming. Some aver, indeed, that there is a universal dreamer, Brahma, slumbering and breathing deeply in all of us, who is the reality of our dreams, and the negation of them.(ibid)
Though the Swamis will say this sort of thing and early advaita has a great deal of illusionism in it cf. Gaudapada’s Karikas, the mature philosophy represented in the commentaries on the Upanishads by Shankara are more nuanced. In any case this cosmic illusion is not a sceptical position which is related to empirical fallibility wrought to its uttermost.