If you are confused about something, you can't think clearly. If your new friend keeps impossibly showing up in different outfits, you'll be confused until you discover she has an identical twin.
Confuse is a modern verb, the old form being confound which means "to bring to ruin or disorder." When you are confused, what's ruined is your sense of the order of things. If you return to a city where you used to live, and a dog grooming store has replaced your apartment and a dump has replaced the park, you'll feel emotionally confused. If you think that Tom is Harry and Harry is Tom, you've confused them in your mind.