It's essentially the difference between being "neurotic" over "psychotic".
An individual suffering from "paranoid delusions", a manifestation of psychosis, will be distrstful and "paranoid" of others. Irrationally believing that others out to get them, no matter the evidence saying otherwise. They truly believe someone is trying to harm than.
Now neuroticism is more or less anxiety, a high strung an worried individual. Someone who is neurotic may feel like someone is trying to harm them but will constantly put this into question. They are fearful, fearing unlikely but possible situations. Affairs, muggings abuse. These fears are usually brief, recurrent and manageable. It usually stems from abandonment anxiety or other anxieties. And finally, unlike psychosis, this paranoia will subside with reasonable evidence disputing the fears.