This is not an optical illusion

The nail passes through a hole in the two center "teeth" of the wooden block.  It's more-or-less in the center, parallel to the long axis of the block - not at a significant angle.

The nail is a normal carpentry item that has not been modified in any way (not cut and reassembled).

The wood is normal wood; the three notches were cut in a solid block of wood before the nail was inserted.  The wood has not been broken apart or glued together.

How was this done?  See if you can puzzle out the method before viewing the solution in the video below.  Credit to the Steve Ramsey at Woodworking for Mere Mortals, via within the crainium. YouTube link.

Addendum Oct 14:  Similar items here.  Hat tip to Duncan Creamer's via his comment at BoingBoing.