How are the past and present skillfully blended in Miller's Death of a Salesman to illustrate the disturbed mind of Willy Loman. How effectively does portray Willy's character?

Miller originally titled his play The Inside of his Head, suggesting much of the story would be about Willy Loman's illusions. To indicate the parts of the action that take place in the present moment, and therefore in the "reality" portions of the play, Miller had his characters at those moments observe the imaginary wall lines around rooms (in other words, they were instructed not to walk through places where walls were supposed to be) and to enter and exit the house only through the door. When characters, in contrast, imagine scenes from the past, they step straight through walls. For the settings outside of the house representing these imaginings, Miller directed that only a few chairs or a table be set up, in contrast to the more fully furnished house interiors. Different lighting and sparse furnishings conveyed the dreamlike, unrealistic quality of the past as Willy remembered it. 
Most critics agree Miller was highly effective at portraying Willy's character through the disjunction or slippage between the reality of his present life and his illusions of grandeur. Willy is a man who has missed out on what could have been a happy and fulfilling life by pursuing a dream, an illusion. He sought the American Dream represented by his father, his brother, and Dave Singleton, a much older man from his youth who Willy remembers as a successful businessman. A big part of Willy's dream revolves around money, but beyond that, Willy dreamed of making easy money, believing personality or charisma mean more than hard work or education and that it is possible money can simply fall into a person's lap. In his dreams, for example, Willy idealizes Singleton as a salesman who could put on his green velvet slippers and sell from his room by making phone calls. Even at age 84, Singleton, in Willy's memory, was making an easy living. When he sees that, Willy says, "I realized that selling was the greatest career a man could want." 
By juxtaposing the false, inflated dreams inside Willy's head with the reality of his life, Miller offers a searing and effective portrait of Willy's failure. At 63, Willy is not rolling in the easy money he has dreamed of all his life; instead, he still works very hard and struggles to pay his bills. His dream is just that: a fantasy. We as an audience wouldn't be able to see this without the comparison to his real life, so the play is effective in going back and forth between the two. Finally, the play shows that in reality Willy's talent lies in carpentry and working with his hands, but rather than valuing this, accepting his limitations, and loving himself, as his wife, Linda, does, Willy sacrifices himself to an illusion of getting rich through selling. Linda can accept Willy as flawed but worthy, while Willy desires to be bigger than life. 
Miller shows us Willy living in unreality to the end of his days—his suicide is fueled in part by the grandiose illusion that he is so well known and well liked that people will flock to his funeral, when in reality, hardly anyone shows up.