Our ego distinguishes us from others. This is probably the reason that self-awareness is the most fundamental issue in psychology. Psychology is built on self-awareness and tries to examine the logic of the mind. Hence, it might be not surprising that the modern Western philosophical form of psychology was heavily influenced by the philosophical works of René Descartes (1596-1650). The same Descartes who found the self through thought!
Thinking forms a fundamental characteristic of your ego in its desire for an own identity and, therefore, creates a self-centred experience of reality. You experience the world the way you want to experience it and in the way you think you experience it. You color your life with your own imagination. A concept emerges from a thought and means something to you. Having a thought about an object, experience, event, or phenomenon, through sense perception, is a way to make sense of the world. Words have a certain value and therefore meaning. Conceptualising, which is; giving words meaning, is meaningful by definition! By doing so, your ego can grow as a mental construct.
The further concepts are thought out of, or the more concepts you have, the more you appreciate yourself. You think you can understand more and can give more meaning. Life only makes sense when it means something. If you contemplate whether something makes sense, how something makes sense, or if something makes sense, you look for meaning. Furthermore, a thought only makes sense if it means something. Applying value to a thought is giving meaning. If, for example, a thought or experience is fun, it means something to you. Fun has a certain value and is a concept.
However, the distance between yourself and objects increases by giving concepts more meaning and thinking up more concepts. This creates a greater distance between your subjective experience of the world and the objective reality (via sensory awareness) as it is. Concepts are often based on other concepts, rather than on a thing from the objective reality. Through this, the number of concepts based on reality, and the reality approach to concepts, is getting smaller and smaller. Concepts that do not describe an object from reality are subjective concepts. These arise through a subjective experience and through social interaction between people, often in a society. Examples of these are; power, faith, love, politics, economy, etc.
Though, concepts are also a prerequisite for (critical) thinking and for understanding our environment through sensory information. Once again; conceptualizing is meaningful by definition. Our knowledge and science have been built on this. Concepts also ensure the development of language and verbal communication. You can clarify what you experience by communicating with other subjects (observers). Other observers may, depending on their ability to comprehend, understand your words and derive knowledge from them. This knowledge is subjective, but relevant, because all subjects live. However, each person is different, so everyone can have a different interpretation. Language is a decisive factor in this. It is useful to be conscious of which concepts are purely self-centred and separate you from the objective reality, and which concepts are useful for our survival, social interaction, and knowledge.
Rochat, Philippe (2003). “Five levels of self-awareness as they unfold early in life” (PDF). Consciousness and Cognition. 12 (4): 717–731.