What exactly about schizophrenia causes people to be delusional?

At least 2 things: Either hallucination or loose association alone can initiate delusions. Often they work together to start and maintain delusions. Imagine if you hear something that is just as real as anything else, why would you not conclude that it is real, and come up with an explanation for it? Explanations can be delusional when seeded by hallucinations, or when unrelated observations get mis-associated.

We're unsure: Psychosis is the main symptom for most with schizophrenia. Delusions are part of psychosis, as are hallucinations. Paranoid delusions are common. By definition, delusions are part of this disease. There is a theory that an excess of the neurotransmitter Dopamine plays an important role.