To me AI psychosis is the handful of friends I’ve had who have done things like have a full on mourning session when a model updates because they lost a friend/lover, the one guy who won’t speak to his family directly but has them talk to ChatGPT first and then has ChatGPT generate his response, or the two who are confident that they have discovered that physics and mathematics are incorrect and have discovered the truth of reality through their conversations with the models.
But language is a shared technology so maybe the term is being used for less egregious behavior than I was using it for.