Quick answer
Wisdom is knowing where you actually are. Folly, in this verse, is a lie the fool is telling, possibly to himself.
Read both lines
The first line makes self-knowledge the substance of prudence, and the object is his way, meaning the road he is on rather than his personality. That is a modest and checkable thing: where is this going, and am I on it deliberately. The second line's word for deceit is the same one used of dishonest scales at 11:1, and the verse leaves open who is being deceived. Read against the first line, the natural answer is that a fool's folly consists largely in a false account of his own situation.
Related: Proverbs 14:12 · Proverbs 14:15 · Proverbs 11:1
New King James Version®, Copyright © 1982, Thomas Nelson. All rights reserved. Full copyright information. Scripture provided by API.Bible.
Go Deeper
If this verse has been used to put weight on you that it was never carrying, ask about it directly.