The False Guardian appears to be a wooden manikin with a pull cord on it's chest. When the cord is pulled, an illusion covers the manikin so that it appears like a soldier of the race that activated it. So, if a dwarf pulls the cord, it looks like an armored dwarf. If a goblin pulls the cord, it looks like an armored goblin.
The illusion will appear as if it is standing still, but blinking or maybe twitching a shoulder. Enough that it looks real. It won't move, though.
If the Guardian is attacked, whether by weapon or spell, it will immediately let out loud clanging noises and start flashing brightly. Anyone standing near it must save vs. spells or be stunned for 1d4 rounds.
Any creatures within sight or hearing distance will immediately be alerted to the attack. Wandering monsters may be attracted to it, along with the whoever posted the guardian in the first place.
False guardians are mainly used by military forces to cover areas of minor importance. They don't have to waste a soldier's time, and any stealthy attackers will assume the sentry is real and will probably attempt to eliminate it, with disastrous consequences. Smart commanders also place it in areas that are more exposed to special operations attacks, so that a guard isn't endangered.