TWAP is a tool used by algorithm based traders that allows them to distribute their orders throughout the day without disturbing price or having their positions known to rival traders in the market. It's similar to and serves the same function, except it lacks the aspect. This can be an issue when position entry/exit may be affected by slippage.
The main benefit of TWAP is deciding how to distribute orders throughout the chosen timeframe. However, just like the traders will normally use it as a moving average or target for price action to pull into.
There is an option to change the timeframe that TWAP is calculated from.
Originally by NeoButane: