I think they’re talking about “justified” madness. Realistic madness is just seeing things that aren’t there, or reacting extremely to mundane stimuli, but if you had somehow been given comprehension of some higher truth about the world that nobody else would ever believe, the actions you take as a result of that knowledge might seem crazy to those around you, even if they’re perfectly logical from your enlightened perspective.
The point of whisleblower laws is to make people feel like a lack of whistleblowers means a lack of things to blow whistles over. Then all they have to do is silence any whistles before they’re heard by the general population and boom, public trust in the system is strengthened without actually needing to do anything drastic like actually fixing the system.