Buddhism, a deity is not an external god that has a self nature, nor
is it merely our own fantasy or imagining. It's a powerful presence
that is a reflection or emanation of our own dharmakaya nature-the mind's
pure wisdom of clarity and emptiness.
The deity comes through the pure, radiant energy of sambhogakaya in
subtle, archetypal forms that bring vitality and inspiration. We might
say it is an intermediary form or appearance that we enter into relationship
with, and it opens us to the ultimate nature of reality.
I have often likened it to a stained-glass window radiant with the sunlight
shining through it. It is the radiance of our ultimate nature that shines
through the aspect of the deity.
Yidam literally means "heart bound", which is to say it is
the deity at the heart of our life. So when people say His Holiness
the Dalai Lama is the embodiment of Chenrezig, it doesn't mean he is
a god incarnated; it means he has fully awakened the nature of Chenrezig
in his continuum."
Peerce from an interview in Buddhadharma magazine