A gross reshaping of external reality to meet internal needs. This one is definitely worth noting and mentioning because it is so often used among couples in their communication. In that context, what is most often meant by it is to say that the other person is not interpreting us properly in communication. As you may guess, it is hard to overcome, and as you could imagine, is not compatible with a long-term relationship. A film where this is seen is Woody Allen’s, Match Point, in which an American woman currying favor with a wealthy family is interrupted by the local soccer pro, and Falls on love with disastrous consequences.
Distortion is much like a funhouse mirror, in which, rather than looking directly at an object or person (as one would naturally be doing by being directly communicative with their partner, using good boundaries, the person unconsciously goes about looking indirectly at reality as through a damaged prism (or funhouse mirror). That “prism” or “mirror” likely is formed and shaped by our history, and all the things that have happened in our lives to shape our beliefs about the world. So, in essence, when we are immature and using this defense mechanism, we are unconsciously looking at our own history and the beliefs it formed, rather than interacting with and testing reality directly.