The Kraepelinian dichotomy is a fancy way of saying that doctors have two big categories they put mental illnesses into. Imagine you have a big box of toys, and you want to organize them. You could put all the dolls in one pile, and all the cars in another pile. The doctors do the same thing with mental illnesses, but they only have two big piles. One pile is for people who are really sad or worried all the time. They call this pile "depression and anxiety." The other pile is for people who hear, see, or believe things that aren't real. They call this pile "psychosis."
This idea was made up a long time ago by a smart doctor named Kraepelin. He thought that all mental illnesses could be sorted into these two piles. It helped him and other doctors understand what was going on with different patients. But today, some doctors think there should be more piles, because mental illnesses can be complicated and not everyone fits into just one of these two big piles.