Our society shuns real individuality and encourages conformity. What you're supposed to wear, how you express yourself, what you do, the way you behave, all of this is supposed to conform to certain norms. If you don't, chances are you'll be cast out, rejected, shunned, and in some places you can even be locked up for being "mentally unfit". Since we're social beings, this doesn't feel very good, and it's understandable that people attempt to change who they are to fit in. We learn to put on masks to hide the socially unacceptable parts of ourselves, and most in our society have worn that mask for so long they have trouble telling between the mask and what's underneath. This mask is what we call ego.
Mainstream society equates ego with self, and this means a whole lot coming from a society full of people out of touch with their authentic self, their True Self. They've lost themselves in the mask they wear, so of course they believe the ego is their "self".
Then there's the "spiritual" people who will tell you that you need to make peace with your ego. The ego is born of separation, it is the source of conflict in your life. If you're really at Peace, there is no ego. There's more than a few spiritual gurus who believe they're masters of their ego when it's more the other way around. The tail wags the dog. They may let go of certain parts of their ego, only to strengthen other parts, such as the desire to control others.
There's people who will tell you that "you need the ego" and that claim really needs another qualifier or two on it. You need the ego if you want to maintain the illusion that you're separate from God. You need the ego if you want your consciousness to stay stuck in the physical realm. The ego keeps your vibration quite low, and while you do need at least a little tiny bit if you want to continue to participate in the illusion, I wouldn't use this as an excuse to cling to the ego. Let go and let God, your Higher Self is a far better guide than the ego/mind if you want a Life that's worth living. Removing the limits of the ego is how you can grow the most.
If ego is self, then who is that observing the ego? For the unconscious people and the very busy minds, they might not even notice this. They might believe the ego is the observer. When the Being is at peace though, the ego can be observed, and it's usually not a very pretty thing. The thoughts it promotes usually feel more like self-denial and self-judgment than self-expression, don't they? The True Self is Consciousness, the one observing the thoughts, but when the person is unconscious, they can't tell the thoughts in their mind from who they are, and so they become the ego. The more you step back and simply witness your thoughts, the less you will be controlled by your ego.
The ego is society, I don't really think you can separate the two. The ego is self-restriction so you can conform to society's norms. I cannot recommend self-expression enough as a way of getting in touch with your authentic self, the unique parts of you. You have to discover and create that for yourself, you wont get there by imitating Jesus or Buddha or any spiritual teacher. They may provide advice on how to get there, but you have to take that leap into the unknown yourself.
Source: The Galactic Free Press