What does Ra mean by "Thought Form"

[Eddie]

I always get somewhat confused when Ra uses the terminology "thought form".  Does it mean that the entity is a Physical in our 3D Realm constructed from thought, or does he mean that the entity is not physical but exists in thought alone?

The former, arising out of the latter.  It would be equivalent to the concept of "tulpa" of the theosophists. 

A relevant passage, from Wikipedia:

Belgian-French explorer, spiritualist, and Buddhist Alexandra David-Néel claimed to have observed these mystical practices in 20th century Tibet.[sup][1][/sup] She reported tulpas are "magic formations generated by a powerful concentration of thought."[sup][8][/sup][sup]:331[/sup] David-Néel wrote that "an accomplished Bodhisattva is capable of effecting ten kinds of magic creations. The power of producing magic formations, tulkus or less lasting and materialized tulpas, does not, however, belong exclusively to such mystic exalted beings. Any human, divine or demoniac being may be possessed of it. The only difference comes from the degree of power, and this depends on the strength of the concentration and the quality of the mind itself."[sup][8][/sup][sup]:115[/sup]

David-Néel wrote of the tulpa's ability to develop a mind of its own: "Once the tulpa is endowed with enough vitality to be capable of playing the part of a real being, it tends to free itself from its maker's control. This, say Tibetan occultists, happens nearly mechanically, just as the child, when his body is completed and able to live apart, leaves its mother's womb."[sup][8][/sup][sup]:283[/sup] David-Néel claimed to have created a tulpa in the image of a jolly Friar Tuck-like monk which later developed a life of its own and had to be destroyed.[sup][9][/sup] David-Néel raised the possibility that her experience was illusory: "I may have created my own hallucination", though she reports that others could see the thoughtforms that have been created.