Okay well, I'm creating a new character much like the one in this thread:

http://www.gamesas.com/topic/1178008-illusionist/page__p__17432455__hl__illusionist__fromsearch__1#entry17432455

A Mesmer (or Illusionist if you will). I've noticed Acadian mentioned that the level cap for this character should be 20, but I'm not sure how to go about doing this. This character will be my first "gimped" character, so I'm not too sure as to what to do...

Acadian, care to share what you did to cap Buffy at level 20? And to everyone else, how exactly does this work? If I'm capped at level 20, will I still have enough magicka to cast high level spells?

I just need some help as to how to this works (picking major skills, etc.) I've seen people saying you need to pick major skills you WON'T use or something along those lines and it's a tad confusing.

Any help is appreciated and if you could post some sort of build idea for the character I'm planning to roll, that would be lovely.

I′m not the best to answer this but I′ll try.

In short, as you stop leveling you won′t get more magicka that way but you can easily get more via other means such as potions and enchantments. As for the capping itself, putting skills you won′t use as majors will effectively gimp your character as those skills are not used and therefore will not contribute to leveling.

In Buffy's case, we capped her at 19 and are delighted to stay that level. To do so, we simply picked four major skills she will never touch (H2H, Blade, Blunt, Security). Because there are less levels to sort out attributes, we did two things to ensure we got her attributes where we wanted by 19:
1. Leveled efficiently, ensuring +5,5,5 each level up.
2. Ignored several attributes including strength, endurance and luck. In her case our attribute focus was on agility, intelligence and willpower. Excess points went to speed (illusion means you don't really have to run and she does have a horse to go fast) and personality (roleplay only - silly, but it is important to her).

There is nothing magic about capping your character. The idea of capping somewhere below 30 allows your character to max their lethality (if built carefully) and prevents foes from continuing to just keep gaining hitpoints by continuing to level. The specific number you pick (19 in our case) is based on the foes and gear you do and do not want to see in you game. In our game for example, bandits and marauders never show up wearing glass/daedric armor. We also don't care a bit about leveled loot or quest rewards. The only 'unique' magic artifact Buffy uses is Azura's Star and she got that at level 2. Foes showing up is a little bit interesting - they actually show up 2 levels before slated, but only on the roads or as 'boss' type enemies. For example, even though we cap at 19 and minotaur lords are level 20 foes, Buffy certainly does occasionally see them on the roads and we kind of like that. She is an archer and will never see a daedric bow, but that is fine for us since she uses a modded bow anyway. So as you can see, the precise level you pick if you cap is a very personal choice based on what you want to see and not see in your game.

If you are looking to cap your character, here are some data points of what you get at various levels that may be helpful. The list is not exhaustive, but covers everything that is of concern to me just fine:
17: Top alchemy gear and sigils
19: Top leveled Hatred's Soul
20: Daedric weapons, Daedric/Glass armor, Mundane Ring, all quests, almost all monsters
23: Perfect amber/madness (SI)
25: Lots of top-leveled quest rewards.
30: Everything, including all remaining top-leveled quest rewards.

Okay, so how should I go about building this Illusionist?

4 major skills I won't use, then 3 I WILL use?

Well, that's what I would do. I like a 'glass cannon' character and illusion is very powerful so such a character can be actually fairly forgiving if played cautiously. I pick race based on looks and image only. I like the Mage as a birthsign and have found it to be a solid choice.

Put a character together, play it and learn what works best for you, then restart the character incorporating what you learn. Repeat until you are happy with it. What works for another player may well not feel right or work for you. Illusion is quite a complex magic school to properly master its awesome abilities to control the minds of foes. I think you will find that time spent studying up on it on UESP wiki will be time well-spent. Properly used, illusion can thin a herd down to a single badly wounded survivor while you invisibly buff your nails. You do need a means of direct damage however. My character uses a bow for this, but there are certainly other viable options for direct damage such as destruction, conjuration, blade or even restoration (absorb health).

One final question, at level 20 do you have maxed attributes/skills?