The Lady must never look directly out of her window (She does not know this.) She weaves a tapestry with designs she gets by  viewing the surrounding world by looking into a mirror. Cursed to spend her life away from humanity, she weaves the images she sees in her mirror all day long. She is tempted by the shadows from the window, of frequent passerbys.

The lady is far removed from reality.  If the outside world is reality, she sees a shadow of it in a mirror & makes a shadow of a shadow in the tapestry. She is a state somewhat like the inhabitants of Plato's cave, who think the shadows they see on the wall are reality and only gradually understand that reality lies outside the cave.  They symbolize us, as does the Lady.  She is safe as long as she lives outside of reality.  But when she becomes aware of Sir Lancelot, the mirror cracks; she falls under a spell and finally dies.  Becoming aware of Lancelot is in part becoming aware of herself and of her emotions, especially those of love and sexuality.  Thus she is cursed by growing up and losing her innocence.  She can't have Lancelot because he already loves Guinevere, and he's never even aware that she exists until the end, when he sees her dead.