I see the topic of Ego rarely being discussed, beyond the basic usage such as "satisfying my Ego" or "he or she has a big ego" that exists in every day language. The Ego has such a fundamental place in human experience, that not explicitly talking about it can leave you unaware of one of the more fundamental aspects of human experience. But before proceeding it's best we both understand what we mean when talking about Ego. I propose the following two definitions:
Ego is an identity that serves as a tool. In combination with language, Ego is used to communicate with other people, who in turn employ their Ego to allow for bi-directional communication.
Ego is the central processing unit of incoming sensory input, you could say it acts like a radar-tool that helps to prevent collision with the environment.
These are very basic definitions, a sort of bare minimum of what Ego needs to be in order for humans to function at a group level in any meaningful way. If this was the only thing, few people would ever be concerned about ego, as these aspects are necessary, practical and harmless. In practice Ego is much more for many people, and this is where problems can arise. To give an example of such a problematic extension:
Ego is my identity, the stories it is made of are as real as my body, I cannot allow my ego to change. A threat to integrity of my Ego is as real as a physical threat to the survival of my body.
First time I shared an earlier version of this definition with someone I was greeted with confusion and asked for clarification, which I will try to do. This definition tries to point to a phenomena which is related to story telling humans do. The story they tell about themselves to themselves and other people starts to override reality. I am just a body and a consciousness platform, paired with a lot of instincts and other features that have their origin in my DNA. Beyond that how I choose to live, what things I value, the things I accept and reject are part of an ongoing story. The moment I start viewing this story as having permanence, and that cutting out part of the story is like cutting of a limb, I fall into the trap of over-identification with ego.
This kind of definition is how many people experience their Ego, it is characterized by over-identification, which causes people to be confused about their own identity. Staying with the essential and unavoidable parts of Ego may superficially appear like a simple task, but entire philosophies have been built to achieve this. It would be like telling a random person on this planet, be like the Buddha-nature and you will understand. This obviously does not work, simply because over-identification with the Ego results in a situation where you will try to transcend over-identification with the Ego while keeping the over-identified Ego in the driver seat. That's like throwing a bucket of water into an ocean and expecting you will see things from the perspective of the ocean.
If you have read the Vertical Development section, and you are using that writing as frame of reference, you will know that the over-identification with the Ego enters consciousness during the "Construct Aware" stage. And the only way to truly deal with the over-identification is to broaden your awareness of yourself to what Carl Jung called the Self. Some useful definitions that I kindly borrowed:
As an empirical concept, the self designates the whole range of psychic phenomena in man. It expresses the unity of the personality as a whole. But in so far as the total personality, on account of its unconscious component, can be only in part conscious, the concept of the self is, in part, only potentially empirical and is to that extent a postulate. In other words, it encompasses both the experienceable and the inexperienceable (or the not yet experienced). … It is a transcendental concept, for it presupposes the existence of unconscious factors on empirical grounds and thus characterizes an entity that can be described only in part. - Carl Jung [“Definitions,” CW 6, par. 789.]
The self is not only the centre, but also the whole circumference which embraces both conscious and unconscious; it is the centre of this totality, just as the ego is the centre of consciousness. - Carl Jung [“Introduction,” CW 12, par. 44.]
Words can't really help you understand the Self, because words originate from the language-mediated ego, and as such they are limited to the Ego realm. If you remember the Vertical Development section, our societies are pretty good at teaching people to arrive at the "Achiever" stage, but the post-conventional development beyond that is not well supported by formal training methods. Post-conventional people can coach others in the right direction, but that isn't that common place in our society yet. Understanding the Self requires a push into the Transcendent realm, which lies even further beyond the "Strategist" stage, for which pretty much no development programs exist. The Generating Transformative Change (GTC) program of http://www.pacificintegral.com is one of the very few that might actually be fostering high-end post-conventional development. But this, as far as I can tell from a distance (read: other side of the planet) is not your typical training program. So most people are left to their own devices.
Becoming more connected to your unconscious can help discovering the Self, as well as embracing direct experience that exists outside of language. Ultimately this is a very personal journey that you have to take in a very personal way. To the best of my knowledge neither the quantitative research of Susanne Greuter that can be found in the Vertical Development section, nor the qualitative research of Dane Hewlett that can be found on the same page, actually helped to understand how people transition in higher end post-conventional development, they merely confirm the existence of these levels.
In case you are wondering, Carl Jung had already noticed that there exists parallels between the experience of the Self and the definition of God in some traditions:
[The Self] might equally be called the “God within us.” - Carl Jung [“The Mana-Personality,” CW 7, par. 399.]