Technically, there is little difference.
“Insanity, craziness or madness is a spectrum of behaviors characterized by certain abnormal mental or behavioral patterns”
There are many negative terms that were originaly clinical terms (mental, idiot, dumb,etc.)
The difference between saying retarded is that mental retardation is an actual diagnosis. Imagine if someone you know was diagnosed with MR and then you heard people throwing around the word retarded.
This btw, is the same thing as people saying I’m so OCD or ADD. It is very offensive to people who actually have those or know those who do!