It’s called Anton-Babinski syndrome, and is very rare. It results from brain damage that occurs in the occipital lobe. Those who suffer from it are officially blind, but believe beyond the shadow of a doubt that they are capable of seeing- even when they are faced with clear evidence that they cannot see. It is mostly seen following a stroke, but can also follow a very bad head injury.
As described by neurologist Macdonald Critchley, the patient often behaves and talks like he or she can still see, but will walk around bumping into objects that are plainly visible nonetheless. He or she will also start to describe people and objects that are around him or her, or more accurately, what he or she THINKS is around him or her. This is where the confusion, or confabulation, sets in. These people believe they can see because they think they are seeing people and objects around them, even though what is truly surrounding them is something completely different.
Think of it like watching a movie and thinking what is happening in the movie is what is actually around you. People affected by this think they know what is around them, but are really completely wrong.