Illusion (temporary sensory misperception):
If walking through a national park on a dark night and a large set of trees nearby take the shape of a monster and one is startled but on second glance the trees are recognised for what they are, it was an illusion.

Hallucination (convinced of a sensory misperception):
If walking through a national park on a dark night and a divine entity assumes its shape from the trees and talks the wisdom of ages and after which one believes they were visited by a god, it was a hallucination.

Delusion (convinced of a clearly false intellectual misperception – belief – that cannot be explained by one’s culture or education):
Here are a few common delusions:
Persecutory
Jealousy
Guilt
Grandeur
Somatic
Thought Control
The line between bad judgment and delusion lays somewhere between beliefs which are based upon overvalued ideas, which may not be clearly false, and ideas and beliefs which are clearly false.
In a Western culture, believing that staff at the local coffee shop have put something in your drink because the staff have been acting increasingly hostile towards you at the time you got ill is something of an unclear belief born from becoming suspicious of hostility (which is a natural reaction).
In a Western culture, believing that staff at the local coffee shop have put something in your drink to poison you because the government is trying to stamp out people who disagree with them is a clearly false notion.
In a Western culture, believing that your 84-year-old husband is having a sexual liaison with a neighbour ten years younger than himself because of the way they smile at each other when gardening is not a clearly false notion.
In a Western culture, believing that your 84-year-old husband is indulging in the pleasures of a secret horny teenage babysitter sex ring because of the way he smiles at your daughter’s babysitter is definitely a cause for suspecting delusion.
The persecutory type is by far the most common of the delusional subtypes with jealousy far off in second.

Psychosis (convinced of grossly abnormal intellectual and/or sensory perceptions and unaware of the abnormality):
Both delusions and hallucinations can be included in a psychotic state, so intellectual and sensory misperceptions that are not only clearly false but grossly abnormal and to which the person is unaware of the grossly abnormal content, thus psychosis can contain both extremes.
To hear the characters of a book as narrated voices in your head when reading or writing is not a cause for concern, and indeed may be considered a honed skill for character creation.
To believe that the voices you hear whilst reading or writing are from an alien entity from a different dimension who is guiding your understanding and character creation with wisdom far superior to what exists in our universe are, without a shadow of a doubt, grossly abnormal perceptions.
Believing that you can predict the weather with your mind is perhaps misguided.
Believing that you can control the weather with your mind is grossly abnormal.

You may have noticed that illusions, hallucinations, delusions and psychosis all revolve around misplaced beliefs in perceptions. They all regard unsuccessful efforts to judge reality accurately.

Illusion, Hallucination, Delusion and Psychosis