Sheets of paper swallowed by the German illusionist (7)
I believe the answer is:
dreamer
'illusionist' is the definition.
(dreamer is a kind of illusionist)
'sheets of paper swallowed by the german' is the wordplay.
'sheets of paper' becomes 'ream' (a ream is a large amount of paper).
'swallowed by' is an insertion indicator.
'the german' becomes 'der' ('the' in German).
'ream' placed within 'der' is 'DREAMER'.
(Other definitions for dreamer that I've seen before include "One lost in abstraction" , "One fantasising" , "One who tends to live in an unreal world" , "description of an Oxford spire?" , "such an unpractical person!" .)