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'Pocket Monsters' are an intellectual property owned by the Silph Company. They are digital monsters at their core, but when materialized they take the form the fleshy, living beings. However, this is merely an augmented illusion. Somehow, Silph's technology is able to interject the digital monsters into reality, somewhat like a hyper-realistic hologram.
Porygon is a man-made digital monster created by Rocket. It is a very simplified, primitive version of what Silph did with the creation of 'real' pokemon.