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By establishing eye contact with only a standard Sharingan, the user can create an empty dimension under their control, which can be then filled with contents of his or her desire, using the power of the Shinju to do so. While physically tethered and connected to the Demonic Statue of the Outer Path, Madara can manipulate the otherwise blank and white world to create anything he wants no matter how detailed, and control it. By doing this he can create a world exactly as he wants.
To trap every human being in this genjutsu, however, it has to be cast onto the moon's surface using the eye of the Shinju. In order to do this, one must become its jinchūriki. The technique is done by assimilating a person into the Shinju. Once this is done, the person is locked in a permanent genjutsu yet will live endlessly from the Shinju's power.