This line reminded me of a lecture from my Psych 101 class back in college:
There are three "views" of ourselves
1. Reality
2. What we wish we were
3. Where we think we are
If 2 and 3 match but are far from 1: we are happy but "delusional"
If 1 and 3 match but we are far from 2: this is VERY often found in people who have depression.
And, ideally for long term happiness, 1 and 3 are close together and 2 is a "reasonable" distance away or close to 1 and 3.