The term “ego” is sometimes used in a way that could be a little confusing.
To me, it seems that it refers to awareness (consciousness) identified with the small self. It is completely caught up in the processes of the small self – the habitual patterns of emotions, thoughts and behaviors. Outer situations trigger habitual responses, and awareness has no choice but to either fuel these or try to push them away. It is exhausting, and leads to a good deal of suffering.
When awareness first awaken to its own nature – as awareness empty of characteristics – the pattern can begin to soften and dissolve. From here, there will be an oscillation where awareness is sometimes caught up in the habitual processes of the small self, and sometimes resting in its own nature – allowing experiences to arise without needing to fuel or push them away. If this is made into a practice, there will be a gradual movement away from the first (caught up in small self) and towards the second (resting in its own nature).
In the gradual process, this process leads to a sense of Big Mind (embracing the absolute and relative), and glimpses and then a more stable awakening of awareness as Big Mind. The full blown experience may also be called Cosmic Consciousness (the universe is consciousness, and I am that consciousness).
Gradually, the “ego” is dissolved. Awareness is no longer exclusively identified with the small self, although it may occasionally – at some times and some situations – be caught up in the processes of the small self (maybe especially in areas where there is still healing needed). This temporary contraction can also be held within the nature of awareness. It is a good opportunity to remind ourselves of humility and of not needing to protect or justify anything. It is what it is.
Footnote: Even after an awakening into Big Mind, awareness may still be blindly identified with aspects of the small self. In short, there is a belief in a thought. In this case, situations that do not correspond with the belief will trigger a contraction, which leads to suffering. There may also be a certain rigidity around it, one-sidedness in view, a need for justification, something (an idea) to protect, and possibly shame and guilt. This will tend to appear unhealthy, even from a conventional view. Any of these is a reminder to look at what is going on. Where am I stuck? What thought do I believe in?