The homunculus fallacy is a mistake in reasoning in which one attempts to explain agency, consciousness, or related phenomena by appealing to a module which solves that very problem.
The classic example is an "explanation" of visual processing in which an image is recorded by the retina, conveyed by the optic nerve, and then transmitted by the visual cortex to the rest of the brain, which "sees" everything. While it is true that images are recorded by the retina and conveyed to the rest of the brain by the optic nerve, this does not explain how the brain processes visual data. Instead, one imagines something like a little person or a floating consciousness (the "homunculus") who does the real work.
This position is typically refuted by arguing that this requires an infinite recursion: if we then ask how the homunculus "sees", we would start with how its "eyes" take in data, and feed them into its own little visual cortex, where we are faced with the same problem again....