It’s when two or more choices are set up as the only ones that can be made, or two or more paths are set up as the only ways a story can go, and then, while the audience is distracted by trying to choose between them, the writer goes with a third (or fourth, etc) alternative which is surprising, logical, and more satisfying than any of the possible resolutions set up earlier.
I think the thing that makes this work is, that the third alternative is set up all along–but so subtly the reader doesn’t quite see it.
One of the examples rachelmanija and others discuss is The Changeling Sea. I won’t discuss the bit of plotting involved there, but the first time I read that book, I did indeed see only two possible endings–and was delighted when the author went with a third instead.
The second time I read the book–years and years later, knowing what would happen–I was startled at how thoroughly the third alternative had been set up after all, so thoroughly as to make it inevitable–and yet somehow, so subtly I didn’t see it until I knew.
A neat trick, that.