Dr Sanity explains:
"You would think it would be a simple matter to be "in touch" with reality. But it isn't. It requires a great deal of cognitive effort--i.e., thinking--and often that effort must assert itself over powerful emotions that draw the person away from the real world, to a place more comfortable and unchallenging--i.e., to their inner reality.
So, how does a rational person determine what is true and what is delusion? How do you decide if something is a myth or is real? How do you decide if someone is paranoid, or simply "connecting the dots" and facing reality? How do you determine if someone is neurotic, where thoughts and behavior are conflicted and distressed, but not inappropriate or outside socially acceptable norms; versus psychotic, where thoughts and behavior become unanchored to reality? [Freud distinguished the two in this way: “in neurosis the ego suppresses part of the id out of allegiance to reality, whereas in psychosis it lets itself be carried away by the id and detached from a part of reality.”]