A twist in a story is a revelation that goes against our expectation(s) of the story, and sometimes, defies the rules of the genre. The twist can be something that comes out of nowhere; it can be an unexpected character that turns out to be the villain (or a hero), or something that was hidden from the character (i.e. they were helping the villains inadvertently).
Sometimes a twist can change the whole meaning of a story (i.e. if the story turned out to be a dream, or if it turned out to be flashbacks). Sometimes, a twist can happen when characters that were thought to have passed away are alive (which happened in Voltaire’s Candide).
When I write short stories, I’m more inclined to include a twist than I would to a novel. In a novel, the story unfolds logically–naturally. Of course, there still can be a twist in a novel, but it doesn’t have the same impact as a short story does.
In a novel, it would be disappointing if the entire story were just a dream. When we invest all that time, we want the entire story arc to sum up to something to a grand conclusion. In a short story, that kind of twist can work. Here are two reasons why: 1) a shorty story is not so much about the characters as to the idea of the story, and 2) the point of the story can be the twist itself.
A twist in a short story is like the revelation that is at the end of a novel. A novel left clues throughout the story that culminated to the revelation. In a short story, the revelation happens all of a sudden. In both cases, the revelation can catch us by surprise.
Fallton Havenstonne 