Firstly, its relative isolation. It belongs to a small family of languages with Finnish widely regarded as its closest relative, but in spite of broad structural similarities and certain shared roots for words such as water and hand, there is precious little overlap between them. According to linguistic experts, the two languages are in fact as closely related as Welsh and Persian. This fuels a feeling of difference in the geographical context, where Slav languages, German and Romanian are the official tongues of Hungary's neighbours. Language is the most immediate and obvious sign of difference in a context where difference is everything.
Language reinforces the belief in qualitative, immutable difference, in ethnicity.
The two are confused to the extent that they have become inextricably intermeshed. This may seem spurious or circular in nature, but it is the type of collective fiction that has been cemented into social fact, hidden in the unquestioned recesses of individual minds, an implicit cultural assumption. Try explaining a phenomenon such as Scottish nationalism to a Hungarian. The fact that the vast majority of Scots cannot understand let alone garble a few words of Gaelic has not stopped the calls for independence from being heeded at least to the extent that some power has been devolved from Westminster to a re-established Scottish Parliament. In Scottish nationalism, there is perhaps an undercurrent of ethnicity, but the mainstream is exclusively civic and cultural.