Broken in Gen 1, balanced ever since.
Psychic was the dominant type in Gen 1 — Alakazam, Mewtwo and Mew were borderline game-breaking, and the type had no Dark or Steel weaknesses yet (those types didn't exist). Gen 2 added both, immediately dropping Psychic from S-tier. Since then Psychic has been a solid support type, best known for Trick Room teams and Assault Vest special walls.
Psychic is a setup and support type. Expanded Force (base 80, 120 in Psychic Terrain) and Psyshock (hits Sp. Def of defender) are the signature moves. Trick Room turns slow Psychic attackers like Hatterene and Reuniclus into terrifying sweepers.
Psychic (90 BP, 10% SpD drop) is the default. Psyshock targets the opponent's lower Def stat. Expanding Force is the VGC-dominant Terrain move. Future Sight is delayed-damage utility.
Mewtwo's base stat total of 680 made it the first Pokémon ever to break the 600 threshold — a benchmark Game Freak now reserves exclusively for pseudo-legendaries and box legendaries.