Madness is an affliction; a negative status effect that handicaps the target.

A creature under the effect of Madness has a chance of hitting themself with any attack they make, be it a melee attack, ranged attack, or magic spell, while they are maddened. If they hit themself with a healing spell, it will be nullified.

Players are able to inflict Madness on a target using the madness spell from the Offensive Affliction Magic skill.

Players can increase their chances of resisting a Madness Affliction spell by wearing jewelry that raises their Desert resistance.

Madakams are also able to make their enemies hit themselves with their own attacks, but they don't actually seem to inflict Madness on their enemies. Rather, they have an ability called Rebound that bounces attacks directed at the Madakam right back. Protecting yourself against Madness thus won't help you fight Madakams.