Overview
An evil twin is a fraudulent Wi-Fi access point that appears to be legitimate but is set up to eavesdrop on wireless communications.
The evil twin is the wireless LAN equivalent of the phishing scam.
This type of attack may be used to steal the passwords of unsuspecting users, either by monitoring their connections or by phishing, which involves setting up a fraudulent web site and luring people there.
Method
The attacker snoops on Internet traffic using a bogus wireless access point. Unwitting web users may be invited to log into the attacker's server, prompting them to enter sensitive information such as usernames and passwords. Often, users are unaware they have been duped until well after the incident has occurred.
When users log into unsecured (non-HTTPS) bank or e-mail accounts, the attacker intercepts the transaction, since it is sent through their equipment. The attacker is also able to connect to other networks associated with the users' credentials.
From Wikipedia (CC BY-SA 4.0).