Ilusionarme comes from the verb ilusionar, meaning to excite someone or fill them with hope, sometimes to the point of self-deception. Used reflexively, as ilusionarme, it means to get one's own hopes up, often about something that may not come true.
In this song, Yami Safdie sings "Mala mía ilusionarme" (My bad for getting my hopes up), admitting she let herself believe too much in a feeling that ultimately disappointed her.
"Me Equivoqué" is Yami Safdie admitting she got it wrong about someone she was falling for.
She never really liked him for who he was, she liked his potential, the person she imagined he could become. When things fall apart, she refuses to blame him for it. The mistake was hers: she built up a fantasy in her head, expected too much, and fell for an idea rather than the real person in front of her.
It is a song about taking responsibility for your own disappointment, and being honest that sometimes the problem is not the other person, but how much you hoped they would be.