Cyberpsychosis is a term in the Cyberpunk anime and it probably comes up in the game as well. I only watched the anime so I'm going to describe what I think it is based off that.
It looks like cyberpsychosis is when a person has augmented themselves so much that their mind is starting to lose control. I think there is too much data being fed into them that they can't keep everything tightly controlled and so begin to go psychotic. The opening of the anime starts with a cyberpsycho going on a rampage of which there are brain dances made of. We also see a key character, Maine, succumb to cyberpsychosis and he ends up causing a shitload of problems.
The idea is pretty cool and I wonder how much of it could be real. Is augmenting humanity going to lead to some for cyberpsychosis? The news today talks about the mental health effects of social media and the always online culture. We already know that today people have more stimulation than ever before. People are on their phones continuously and I can see this only getting worse. Imagine if they were hooked up to machinery that would fire all sorts of data at them constantly.
Humans are probably meant to only process a certain amount of information and once we hit that limit we probably do go a bit haywire. I'm not sure if we can evolve past this though. Even David who was special still died young and went psychotic. There is also a theme that once you start augmenting, you can't stop. Its reason why Maine would never downgrade to get control of himself and why even David pushed the edge further and further.
I already think kids are fucked based on the culture and tech we are building and if we ever do get to body modifications being mainstream, then we'll get so much worse. It is the future we were promised after all.