The notion comes from Lacan (with whom I have substantial disagreement), but Slavoj Zizek explains it in a way that makes sense to me in his book, The Sublime Object of Ideology.
The link above goes to a summary of the book’s ideas as they can be applied in film analysis, but it seems they can apply to any venue. He’s one of the few philosophers I’ve read who manages to address both mass media and other large social structures and interpersonal relations.
I’ve found two of his examples particularly instructive: Pride and Prejudice and the sinking of the Titanic. Zizek claims Austen’s novel illustrates a “double failure, this mutual misrecognition, [which] possesses a structure of a double movement of communication where each subject receives from the other its own message in the inverse form….If we want to spare ourselves the painful roundabout route through the misrecognition, we miss the Truth itself: only the ‘working-through’ of the misrecognition allows us to accede to the true nature of the other and at the same time to overcome our own deficiency – for Darcy, to free himself of his false pride, for Elizabeth, to get rid of her prejudices” (63).
The example of the Titanic is more complicated because it involves time in a way that is extremely challenging to conceptualize. Zizek writes of “overtaking ourselves towards the future and simultaneously retroactive[ly] modif[ying]…the past”. He is still discussing misrecognition and its necessity, arguing that “the error is internal to the truth” (69). Fourteen years previous to the sinking of the Titanic, “a struggling author named Morgan Robertson concocted a novel about a fabulous Atlantic liner…” with characteristics so close to the actual Titanic that the coincidence seems nearly prophetic (quoted by Zizek, p 69-70, from Walter Lord). Zizek’s point is that the conditions for the wreck of the Titanic and the cultural impact of the tragedy were already anticipated: “at the turn of the century, it was already part of the Zeitgeist that a certain age was coming to an end”, hence when the Titanic actually did sink, it was “a form in which society lived the experience of its own death” (70). The implications of this line of reasoning are more than I can work out right now, except to say that Zizek uses this event to expose the relationship between ideological fantasy and the Real.
A few things I came across that I’d like to spend more time with: The Desert of the Real and The Symptom.