It's the adult version of this
It's not only a disorder.
I was listening to an abridged reading of a book by a psychologist who helped those who care for the mental health of carers for people suffering with dementia.
One situation is when the sufferer imagines their carer is part of 'a conspiracy' against them. In one case, the husband point blank refused to believe he was married and when the wife pointed to photos, he insisted that 'they' had planted the pictures there. They can be incredibly imaginative and create explanations quickly.
The ability to reason against evidence is a natural function of our mind. Apparently, it helps us to critically analyse any presented 'evidence' or 'fact' rapidly - going through possible permutations - until we assure ourselves that the evidence is actually true. We're talking about in nanoseconds here.
With dementia sufferers, their minds aren't finishing the critical analysis and just staying at a permutation as a certainty. Perhaps those who completely refuse to accept contradictory evidence, making up wild explanations, are doing this too. To have validation, a certainty that they can cling to, their minds would rather accept outlandish explanations than have to face up to being fooled or essentially wrong from the start. In short: no one likes to be wrong, or proved that they were fooled.