I was asked this question a month or two ago. How do you tell delusion from reality? The first part of the answer is to answer what is delusion! Here is the definition (one of many): delusion is rooted within ego's belief thinking we are separate from the universe and then to "project" out a different world based solely upon our own image. So delusion is the active projection of ego creating a false illusion of what reality is. How to tell the difference? I use my third eye, in other words when using the third eye: delusions have no substance: the third eye cannot see delusion. It "sees" potentials... which people often mistake for delusion. I will have to define what the third eye is later, since so much confusion exists on the nature of the third eye.
The answer will surprise many as it isn't as mystical as many make it, even if in effect it produces mystical experience. The third eye is a Meta-organ, your mind and senses working together to form a larger more "sensitive meta 6th sense" which can give us surprising insights and capabilities. For those developing the third eye. Separating out the images of potential that the third eye overlays upon your natural 5 senses and the reality your senses show is a very confusing issue. Here is the tricky part: since our third eye reuses and projects information upon our other senses. In this, nothing your third eye reveals is "real". However, It's not delusion, nor illusion: rather it's information and pattern overlay only: Representing the various potentials of the situation or object you are examining within your third eye.
As a result I apply the yin/yang of truth/falseness filters I teach students to use to navigate the information you receive. In other words: as a projection it's information to be used relative to the situation. The third eye is a very real part of our nature. With the information you gain from the 3rd eye it's possible, to embrace, navigate and even shape what others would call reality. What is important to grasp is: Much of Taoist practice reverses the shaping that we do upon ourselves. We can start off as one shape, to let go of form, shedding aspects of our nature... to then become whole and formless again. To un-carved oneself. This is the path of releasing ego.