A delusional person believes things that couldn't possibly be true. If you're convinced that the microwave is attempting to control your thoughts, you are, sadly, delusional.
Delusional comes from a Latin word meaning "deceiving." So delusional thinking is kind of like deceiving yourself by believing outrageous things. Delusional thoughts are often a sign of mental illness, but the word can also be used more loosely to describe behavior that is just not realistic. If your friend thinks he's going to get rich playing video games, he's probably not mentally ill, but it's not a stretch to call him delusional.