An outcome considered to be too obvious turns out to be what happened. Suppose there has been a murder. There are only two other people in the house at the time. One acts mean and surly to the detective, doesn't treat the other house dweller well, doesnt seem too concerned about the death, and reveals he had both a motive and opportunity to kill the victim. The other housemate, by contrast, is very polite and helpful to both the detective and her roommate, is visibly upset by the death, and seems to have a rock-solid alibi and no real motive.
A Genre Savvy viewer might quickly conclude that the nice housemate is the murderer and the surly one is innocent. Why? Because the evidence against Mr. Surly is too obvious, and the reader suspects a Red Herring.
In many cases, the above description is exactly how it happens (see most episodes of CSI). However, sometimes the author pulls a fast one—it turns out Mr. Surly is guilty after all! All that evidence against him, which the reader dismissed on the grounds of being too obvious, is actually correct and valid.
Thus is illustrated the essence of The Untwist. The author drops a large number of hints at the start of the story which a reader assumes to be obvious red herrings, and thus is surprised when, later on, it turns out that the simplest, most obvious explanation was the correct one. Somehow, the author has managed to subvert the reader's expectations by not subverting their expectations.
This technique obviously carries with it the risk that, if it is not very well done, or the audience doesn't think there's a Red Herring in play, they will not anticipate that there will be a twist. In other circumstances, the writer seems to assume the audience must possess the intellect of a lobotomised turnip, leaving them feeling treated as if they're just too dumb to handle a twist.
This technique is played with occasionally. In one fairly famous mystery book, the obvious person is guilty—but the obvious evidence and way he committed the crime is false: it was all part of an Evil Plan based around "double jeopardy" laws which prevent people from being tried for the same crime twice. Basically, he planned to trick the police into using the false evidence at trial, which he would then easily dismiss.
Contrast the Shocking Swerve, which pulls a twist out of nowhere and contradicts prior facts. Compare Meta Twist, where an author who relied on a specific twist surprises the audience by averting it. Not to be confused with The Un-Reveal, unless you expected The Unreveal to be subverted. Truth in Television: in Real Life most homicide victims are killed by someone they knew, and, following Occam's Razor, the most obvious suspect is usually the culprit. Compare Hidden in Plain Sight.
Sister Trope to Captain Obvious Reveal, where the twist is also completely obvious to the audience but the creator seems to think it won't be. May overlap with Obvious Judas, where the most Obviously Evil character turns out to be the villain.