Put very simply, pattern recognition involves matching information from a stimulus (visual, auditory, tactical) to information in the memory. Usually this is automatic. We receive various stimulus from our immediate environment and gradually these trigger specific information from long term memory.
We use pattern recognition for multiple purposes and we may not even realize it consciously e.g. facial recognition, learning languages, memorizing or identifying works of music and so on. Though pattern recognition may help us in several areas, if that goes wrong can lead to several issues.
Here are the issues one may face around pattern recognition:
Apophenia: The human tendency to see patterns that do not actually exist is called apophenia. Though this is usually harmless e.g. faces or figures in shadows, in clouds, and in patterns with no deliberate design, however this may lead to serious consequences such as conspiracy theories, misinterpretation of statistics and scientific data, and some kinds of religious and paranormal experiences. This also may suggest the onset of schizophrenia.
Pareidolia: It is a psychological phenomenon in which the mind responds to a stimulus, usually an image or a sound, by perceiving a familiar pattern where none exists. Pareidolia is also what some skeptics believe causes people to believe that they have seen ghosts.
Essentially, things may go wrong when the human mind tries to find patterns when none exits.