I think it is defined as: "Common term for psychiatric conditions leading to a misperception of reality..."
If you look it up in Webster Dictionary it is defined as:
Psychosis is a psychiatric classification for a mental state in which the perception of reality is distorted.
Persons experiencing a psychotic episode may experience hallucinations (often auditory or visual hallucinations), hold paranoid or delusional beliefs, experience personality changes and exhibit disorganized thinking (see thought disorder).
This is sometimes accompanied by features such as a lack of insight into the unusual nature of their behavior, difficulties with social interaction and impairments in carrying out the activities of daily living.