I first ran into this concept with Cyberpunk 2020. Fun game, a lot of good ideas got mined for my Shadowrun games.
The core concept is that too much 'ware can cause psychological detachment from the rest of metahumanity. So much so sometimes that a psychotic break can happen and the individual, now nigh unstoppable to the general public, can go on a rampage, completely withdraw from the world, or become so cold as to be unrecognizable as a person. This is especially true for cyberzombies, but they have expensive therapists and technology keeping them in check.
But even the less extreme modifications have been known to cause this condition. Essence loss is related to it, but only loosely. It's more that the 'ware causes them to stop viewing themselves as part of the human race, and virtually any amount of augmentation could cause that.
So, have you ever used cyberpsychosis in your game? If so, how much did it affect the game?