Hello Oldsoul,
I tend to think of psychosis as a very marked state. In terms of my own experience, the portions of it that people might label as "psychotic states", I was immersed in a completely different world in which everything took on a profound sense of meaning and was only connected to "this" level of reality by the slimmest thread. I suspect that might be the more extreme end of the spectrum but I don't know for sure. There was also a preceding stage that I refer to as "reality-blurring" wherein the two worlds began to bleed into the other.

In terms of my own child's experience, they seemed to remain a little more connected to "this world". Sometimes, unusual thoughts or beliefs would arise out of their interactions in their daily life; these thoughts and beliefs then became very true and real to them. For example, they might believe that someone liked or disliked them very strongly but there wasn't really any rationale present for them to develop those beliefs or thoughts. After seeing them go through this a number of times I felt this might be what some people call "delusional" thinking but these "delusions" were not as marked as the full-blown psychotic states they underwent wherein they experienced themselves as being in a completely different state of reality.

To put it another way, let's say that you and I are engaged in a conversation with someone who is talking about his car. We might both agree that his name is Bob and his car is blue.

If you later pulled me aside and said that you thought Bob was secretly in love with you and he bought a blue car only because he knows blue is your favorite color and he wanted to impress you, I think that might suggest more of a "delusional state" -- especially if I hadn't seen Bob do anything that indicated a romantic interest in you. In this case, you're still responding to "reality" but something in your response is a little off, it doesn't quite mesh with my sense of reality but it also seems to go beyond a mere difference in opinion.

If you, still later, were to share that Bob was actually Christ and there was a battle going on between good and evil and the blue car was actually a holy chariot we had to get into before the world ended, I think that would suggest more of a "psychotic" state. In this scenario, you're very much in a completely different reality, very separate from this one.

This brief article may also help shed some light on different states of consciousness...