Participation mystique. A term derived from anthropology and the study of primitive psychology, denoting a mystical connection, or identity, between subject and object. (See also archaic, identification and projection.)

[Participation mystique] consists in the fact that the subject cannot clearly distinguish himself from the object but is bound to it by a direct relationship which amounts to partial identity. . . . Among civilized peoples it usually occurs between persons, seldom between a person and a thing. In the first case it is a transference relationship . . . . In the second case there is a similar influence on the part of the thing, or else an identification with a thing or the idea of a thing.[Definitions," CW 6, par. 781.]

[Identity] is a characteristic of the primitive mentality and the real foundation of participation mystique, which is nothing but a relic of the original non-differentiation of subject and object, and hence of the primordial unconscious state. It is also a characteristic of the mental state of early infancy, and, finally, of the unconscious of the civilized adult.[Ibid., par. 741.]

Symbiosis. A psychological state where contents of one's personal unconscious are experienced in another person. (See also projection and soul-image.)

Symbiosis manifests in unconscious interpersonal bonds, easily established and difficult to break. Jung gave an example in terms of introversion and extraversion. Where one of these attitudes is dominant, the other, being unconscious, is automatically projected.

Either type has a predilection to marry its opposite, each being unconsciously complementary to the other. . . . The one takes care of reflection and the other sees to the initiative and practical action. When the two types marry, they may effect an ideal union. So long as they are fully occupied with their adaptation to the manifold external needs of life they fit together admirably.["The Problem of the Attitude-Type," CW 7, par. 80.]

Problems in such relationships typically surface only later in life, accompanied by strong affect.

When the man has made enough money, or if a fine legacy should drop from the skies and external necessity no longer presses, then they have time to occupy themselves with one another. Hitherto they stood back to back and defended themselves against necessity. But now they turn face to face and look for understanding-only to discover that they have never understood one another. Each speaks a different language. Then the conflict between the two types begins. This struggle is envenomed, brutal, full of mutual depreciation, even when conducted quietly and in the greatest intimacy. For the value of the one is the negation of value for the other.[Ibid.]

The ending of a symbiotic relationship often precipitates an outbreak of neurosis, stimulated by an inner need to assimilate those aspects of oneself that were projected onto the partner.

This link is excellent. http://www.answers.com/topic/projection-and-participation-mystique-analytical-psychology

This is an abstraction from it, of an important idea: "Carl Gustav Jung defined projection as an initial objectified representation of the contents of the unconscious beyond the states of so-called "participation mystique" (mystical participation) and "archaic identity," and he showed how the individual can be led to see through the illusions of projection and yet, at the same time, to experience symbolic life."

"As early as his psychiatric studies written between 1900 and 1908, and also in his thesis, "Psychology and Pathology of So-Called Occult Phenomena," which he defended in 1902, Jung was investigating the internal coherence and meaning of representational systems that were largely being ignored by his contemporaries. His conception of "highly charged emotional complexes" (gefühlbetonte Komplexe) and his contact with Sigmund Freud led him to analyze, in his "Psychology of the Unconscious"

"In the states of participation mystique and archaic identity there is no differentiation between object and subject and no distinction between lived experience and what the subject believes he or she perceives about the world. However, projection, which is more specific, enables the subject to apprehend and potentially recognize contents that are still unconscious."

The word 'apprehend' needs to be understood, it means there is distance between one's thought and inner content, it is more like objects in the exterior world, to be looked at, named, understood and related to but all thought is not 'me'. Some is, some is 'not me'. I remember reading William Glasser's Mental Health or Mental Illness. Somewhere in the book he wrote that every person needs to have one sane person to relate to, that is essential to mental health. I don't remember anything else in that book, but I paused for some time to think about the idea that sanity requires relationship with a sane person. At the time I had no idea what the word 'insanity' meant, or for that matter, what the word 'sane' meant.  Reading those words in the book formed a kind of 'bond', when I read them, I was 'locked onto' them and that was a degree of 'apprehension' of my inner content, even when I didn't experience a high degree of the 'bond' between me and the words.