Our society loves labels, it could be argued that modern society wouldn't exist without these labels. 'Fat, thin, pretty, ugly, single,' etc. Mental illness diagnoses can be seen as labels to determine the difference between normality and the ill. Some argue that normality doesn't exist, however the difference between the mentally ill and the non ill can be very noticeable. Mental illness is a label and still needs to be labeled in order for doctors and people treating the ill to be able to distinguish between them and administer the appropriate treatment or therapy to others, which is very beneficial majority of the time. There has been many discussions between psychologists about the effects of these labels on the ill, self fulfilling prophecies where people fall into the stereotype of their illness and blame it for their actions, somewhat proving that these labels are real.
What makes one person "ill" and another person merely "difficult" or "flawed"? There really is no consistent answer to this. They don't diagnose based on physical signs anyways it's based on behavior. Although even if they did diagnose solely on physical signs that wouldn't help either, because while physical signs could be used to help guide treatment the physiological and/or chemistry is not what makes an illness an illness. Furthermore even 'normal' variations show variations in physiology and chemistry. "Introversion" was recently nearly added to the DSM!
With increases in research and technology it becomes more and more easy to manipulate the human mind through medication and presumably in the not so distant future gene therapy and even implants. What if society defines "illness" wrong? What if people who are different and misunderstood get defined as ill and forcefully 'cured'? At its logical extreme of "different"="illness" we would turn ourselves into a real life version of the Borg.
The label has merit. In fact "illness" itself is just a label. Cancer, diabetes, heart disease these are just neutral physical configurations in the Universe except for the fact that people give them value. Hence we shouldn't just chuck the label of "mental illness" in the trash. It has use.
However, it is a concept that should be split. One label should be used for personal distress or for when a patient is voluntarily helping to alleviate the distress of others in their life. Parents should not be able to directly force their kids into therapy but as parents should have the right to use grounding and other punishments that they have the right to as parents to indirectly force.
Directly forcing treatment is mind control. That's where I come to the other two. One should be for when someone breaks the law but then evidence shows they might be rehabilitatable with certain treatments. In this case treatment should be optional, a condition of parole (but because prison is also about deterrence just because evidence shows a person would probably do OK shouldn't automatically mean they get parole). The person can choose to stay in their cell if they would like.
The third is thinking things that aren't real are physically (as in within this reality as we experience it) real. This wouldn't include people who think the odds are we're living in a simulation as long as their beliefs about the reality they are interacting in which they think is probably a simulation is correct and they act just the same as if it were real (that is in a functional/instrumental sense they experience reality as reality). That's metaphysical philosophy not illness. I mean along the lines of someone thinking their neighbors are aliens invading the Earth kind of thing. It's clearly vital to be able to tell the difference between what's real and what's not. Then treatment should be directly forcible.
There is exactly 0 medical or scientific evidence that mental illness even exists. It is simply a matter of labeling people who do not agree with societal norms and shoving medication down their throats to "fix" them. Even any psychiatrist you ask will tell you that there is no scientific medical basis for mental illnesses, and most don't even have set symptoms and definitions. Therapists will just stick the closest label on someone who doesn't behave exactly how society expects, and give them some pills to help them fit in with every other clone on the planet.
Sometimes labels are misused. I hate when people use the term "retard" out of context for example. I also despise people who claim to have the mental illness of obesity, when in cold reality, they are just lazy, and have eaten more than they should have.
That being said, I don't think the fact we have discovered more mental illnesses should be seen as a bad thing.
For example, my kid sister has ADHD and is bipolar, both relatively new discoveries. What once would have been seen as a wretched, uncontent child (and therefore would have been reprimanded unfairly), now is seen as an ill child that needs specific help, and thus can be given the proper treatment and the proper meds. She can focus, has learned to control her temper and has been given specific techniques to help calm her down when she feels stressed. The same goes for my Autistic brother (not a joke).
Some people take it too far and need a good ear pulling, but I can say that generally, new psychological breakthroughs are positive 9 times out of ten.
Labels are terms that we use to define things. But mental illness is a real deal. Some people are crazy. We have also classified those kinds of illnesses (Depression, Schizophrenia, Dementia, Bi-Polar), these are not labels we have created, they are actual observable and treatable illnesses. I say it's not a label we created to stick on to some people that are different. I think it's a real phenomenon.