Source confusion is an area of PSS which is handled somewhat crudely. The first problem is to identify two or more close sources in the significance map.
The search mechanism is to find distinct peaks in the significance map which lie above the specified threshold. This method gives the first problem, namely; two sources can only be identified as such if there is a "saddle" in the significance map between them, and the value at the saddle point lies below the search threshold.
The second source confusion is that of spurious sources caused by blips in the significance map which tend to occur on the flanks of bright sources. PSS removes such sources by comparing their separation with the 50% enclosed energy radius multiplied by the value of the MULREJ parameter (default 1). Should two sources be found closer than this, the less significant (ie. less bright and less psf-like) is discarded.