How can you tell a badass antihero from a violent sociopath? How can you tell The Cassandra from a rambling madman? The answer is: You can't. Not by observing and interacting with them, anyway.
The audience knows things that characters don't. They know that the USS Enterprise won't blow up, or that Spider-Man won't become evil, at least not for long. They know what is real and what is not. Characters, however, don't know that. They don't know they are in a story and don't know who the main characters are, even if they are Genre Savvy. Even if they are willing to share their story, they can't always trust each other.
When viewers forget about this fact, strange things will happen. A reasonable helmsman on a starship, who objects to going on a Suicide Mission, will be seen as a whiny scrappy, and when The Captain is Court-Martialed for his decision, viewers won't understand why. For Genre Savvy viewers the captain's plan had a 100% success chance, but for characters it was more like a 99% chance to get their entire crew killed and their ship destroyed. Viewers won't approve the Super Registration Act, but for comic book world bystanders, superheroes are masked armed men with unknown agendas. They don't know what to expect from them, and have all the reasons to be paranoid, especially considering that Face Heel Turns are not uncommon for supers. A Cowboy Cop finally arrests John The Ripper and beats him until he confesses his crimes, but an Amoral Attorney gets him released. Viewers are infuriated, but nobody in-universe can be sure that the cop caught the right man (unlike us, they didn't see him do it), and they can no longer trust any evidence brought in by the arresting officer. Viewers are calling the king of Arcadia stupid because he refuses to believe that Sir Gabriel actually saw the Beast From Beyond, but the king is more concerned that one hundred men came to his palace this month and claimed that they saw the Beast, which means the treasury has to pay for another mental asylum because the existing ones are overcrowded. We can go on forever.
There is another form, which is when viewers don't have myopia themselves, but project it on the author, which causes the false claim that Strawman Has a Point. For example, the admiral who accuses The Captain of reckless endangerment may be perceived as a "strawman with a point", while the author originally intended to make the point that Captain is in fact reckless.
Moral Dissonance may occur if the author tries relying on Audience Myopia, or has it himself, but the audience doesn't. The Quote from the Moral Dissonance page is a good example of what may be Audience Myopia: One Cowboy Cop is fighting a bunch of other cowboy cops, but the former is good and the latter is evil, because everyone killed by Jack was evil (something for which there is no way to check from inside the world).
This trope is closely related to Like You Would Really Do It; viewers know something is unlikely because it would disrupt the Status Quo, but for characters in the setting, there's no reason to think this way. See also What Measure Is a Non-Badass?, Draco in Leather Pants/Ron the Death Eater, Rooting for the Empire, where the audience and characters have completely different values (the audience values coolness and badassery, the characters would prefer someone who wouldn't try to kill them). See also Dramatic Irony, where this applies to plot rather than values.
Naturally, this would be a Justified Trope if a character was in fact a Fourth-Wall Observer (thus giving them the same amount of knowledge as the audience), but those are still the exception to the rule.
No examples, please.