Based on just the quote alone, not knowing the context, I would say:
Some mental illnesses involve delusions and hallucinations (for example, schizophrenia). These people believe strongly (have faith) that their delusions/hallucinations are true/real.
Objectively, we know that these people have a mental illness and that their beliefs about reality are not true.
Since faith is often talked about in a religious sense, I'll point out that many people have delusions/hallucinations that are religious in nature. Some people, for example, believe that they are god or a messenger from god; others believe that god, angels, demons, or the like are speaking to them (and may be telling them to do things).
Whether you're talking about faith in a religious context, or simply faith that your beliefs about something are true, the mentally ill provide a clear example of the fact that faith that something is true is not enough to prove that it is true.
Our minds are capable of convincing us that something is true, even if that thing isn't true. This doesn't mean that every person who has "faith" that something is true is mentally ill, only that we should strive to base our beliefs on more than just faith alone.
That faith without action will only land you in an asylum. Those people had dreams too, and believed God would save them, and it got them no where but an asylum with the rest of the crazies. You can have all the faith in the world in God, but it won't prove anything tangible to represent it to others. Appropriated action proves things, not believing it and hoping it will magically materialize.
Its a toughie my guess. That regardless of what you may believe to be true, that belief alone is just that,a belief. It is only relevant to the person and does not make it true or solid. That faith with only one member is called a madman, a faith with only a few members is a cult, and faith with a significant number of followers is a religion.
Lol! I read that quote as if he was being facetious. Therefore, my interpretation may be off. I would think he means that because the patients of a lunatic asylum have "faith" in what they believe even though the mentally stable know that it's not true. Proving that faith is perception and can not prove facts.
Those people have complete faith that what they see/hear/believe to be true IS, in fact, true. However, their commitment to an asylum shows that their faith isn't enough to prove they're right. People discard their "faith" and put them away to get help, to have their "faith" proven false.
Those "crazy" people are faithful about whatever they believe in... for example there was a lady that would stand on a busy road by my house, all day, day after day with signs that didn't make any sense "Britney Spears works for satan", "the world is ending", yadda yadda, abortion, george Bush, all crammed on one sign... Was her message really getting across or was her only message: "I'm crazy!"
I personally love "crazy" people they give my city flare... and scare away uptight soccer mom's and their whiny kids... lol.
I'm not sure to be honest. I feel like it means nothing can replace reality and seeing those people makes you appreciate more what you have in life while having faith on something you can't see can't do much good for you
I enjoy Nietzsche quotes too. I think it means that while they may see things that aren't there or hear voices or have other forms of personality disorders they believe in these things very strongly. We all know that this type of faith doesn't mean that these things are real outside the scope of their own mind. I think that's what the quote entails.