Helmholtz held that phantom tones are real distortions produced inside the ear.

Evidence

The hardware produces distortion products, which if presented to the ear are real, not phantom. Helmholtz suggested that this kind of distortion happens mechanically in the ear, so that the phantom tones we hear are in fact real by the time they are detected. — Eric J. Heller, Why You Hear What You Hear- An…, 2308

Categorization

• XREF: This is the classic ‘combination tones / difference tones’ debate — connects to Ohm’s acoustic law and Helmholtz’s resonance theory of the cochlea from earlier chapters.
• DEFINE: Clarifies what phantom tones are: perceived tones arising from nonlinear distortion, contrasted with real distortion products.