Can you tell me how do delusions in schizophrenia work?

Delusions: Delusions can be part of schizophrenia as well as a number of other disorders. They're signs of altered perception due to mental illness or intoxication/withdrawal states, etc. Stimuli to your sense receptors must be interpreted by the brain to have meaning -- and those interpretations determine how you experience yourself and others. When delusional, these interpretations are very rigid too.

Psychosis: Delusions are defined as fixed false ideas and sometimes are accompanied by paranoia and suspiciousness. It is generally not recommended to confront the person with them directly. The person with the delusions often cannot be convinced that their ideas are incorrectthis symptom is seen in many illnesses. Try to encourage the person to seek treatment as it is often fairly easily treated.