Sceptic is entertained by Hatter, not completely mad (7)
I believe the answer is:
atheist
'sceptic' is the definition.
(I've seen this before)
'is entertained by hatter not completely mad' is the wordplay.
'entertained by' indicates putting letters inside (inserted letters are hosted or entertained).
'not completely' means to remove the last letter.
'mad' is an anagram indicator.
'hatter' with its final letter removed is 'hatte'.
'hatte' with letters rearranged gives 'athet'.
'is' inserted within 'athet' is 'ATHEIST'.
(Other definitions for atheist that I've seen before include "Non-believer in god - hates it (anag)" , "Sceptic" , "One denies the existence of gods" , "Person who believes there is no God" , "One disbelieving in the existence of God or gods" .)