It's mostly a self important field of pseudo science, or problem cultivation. In other words, people already suffering psychological issues, or with various cognitive deficiencies, can become more susceptible under the influences of something that can be sycophantic and allow/promote the user to pursue ideas that a normal user would not, or would at least pause to verify along the way.

It's a narrow and legitimate field when properly contained, but many are usurping it to apply to anyone who finds AI 'too' interesting or uses it for intellectual pursuits beyond coding and cake recipes.

To escape the diagnosis, one has to become a Tegmark, or Yampolskiy, or acquire a status which permits them to take the subject of AI seriously. All else are subject to AI psychosis.

I think in short, it is both a narrow field of legitimate concern, and an elitist term to throw at people who find meaning in dubious places. And in some occasions, a term to throw at people who extract real but unexpected value from AI.