“Lampshading” is one of my favorite and least favorite writer tricks: It’s where you acknowledge a shortcoming in your plot through some dialogue, usually jokey, as a way of winking at the audience and moving on. Yes, I know this is a giant hole in my story, but I couldn’t come up with a solution, so let’s have characters make a meta-statement on it, and we’ll all feel clever then, because meta is fancy. An inoffensive lampshade would be when, say, Lost characters toward the end of season 1 remark on how strange it is that none of those other background people on the island seem to do much except follow the main characters from beach to cave and back again. An annoying lampshade would be if someone on Lost during the final season said, “Hey, too bad none of these plot strands that people have dedicated their entire lives to decoding will never amount to anything. Talk about lost! Ha ha!” Of course, no one really did that, but it wasn’t because it wasn’t true.

Jennifer Keishin Armstrong

Lampshade a word used for situations in storytelling where the concerns, criticisms and arguments of the audience are answered in the text itself to assuage any disbelief and therefore frustration a reader or viewer might possess.

By underscoring points of possible contention, usually humorously, the suspension of disbelief is retained. Often used to account for implausible developments, ridiculous motivations, bizarre twists and illogical situations, a lampshade can also cover obviously cribbed plot elements by having the author acknowledge through a character that “This is just like…”A lampshade can be used to explain threads that may have lain dormant, and often prods at the fourth wall by having characters address the audience, or realities outside their own existence.

Also known as Spotlighting, sometimes as ‘Cousin Larry Trick’.

Here’s the Lampshade Hanging entry at TV Tropes.

 Lampshading In Comedy

This joke would fall under ‘jokes about jokes’, the eleventh category of Scott Dikkers’ taxonomy of humour. (Scott Dikkers runs The Onion.)

GUARD #1: What, ridden on a horse?

ARTHUR: Yes!

GUARD #1: You’re using coconuts!

ARTHUR: What?

GUARD #1: You’ve got two empty halves of coconut and you’re bangin’ ’em together.

Monthy Python and the Holy Grail, to lampshade the fact that production could not afford horses for a medieval movie.

And an example from science comedy:

“…If you’re wondering how he eats and breathes, and other science facts; Just repeat to yourself it’s just a show, you should really just relax…”

— From the theme song to Mystery Science Theater 3000, effectively ironing over the pesky scientific impossibilities.

 Hey, why don’t we just…

In the psychological thriller Panic Room starring Jodi Foster and the young Kristen Stewart, it isn’t until the end of the action, after Jodie Foster’s character has left the panic room and smashed all of the cameras that one of the bad guys says by way of lampshading, “Hey, why didn’t we do that?”
This is a bit of a hack, and I guess the screenwriters couldn’t see another way past this plot knot, because the last thing you want an audience to say is, “Why don’t they just…” If you’re going to hae a character say it, there had better be a good reason why the characters can’t just do that very thing.

Lampshading Unlikely Writing Skills In Non-Literary First Person Narrators

James Wood points out that lampshading is sometimes used by the canonical writers to explain why their heroes seem to have such a lyrical style. What he is describing is a type of lampshading:
Humbert Humbert [in Lolita] famously announces that he has a fancy prose style, as a way, surely, of explaining his creator’s overdeveloped prose. Bellow likes to inform us that his characters are “first-class noticers”.
How Fiction Works

Hey, why doesn’t she know that already?

In Carrie, Stephen King embarks upon some heavy lampshading before the reader will believe that his heroine knew nothing about periods, even at the age of 16. He talks about how fundamentally Christian the mother is, and prudish. In the 2013 movie we are told that Carrie has been homeschooled until recently.

Lampshading To Mask Inconsistencies In A Storyworld

Gregory Maguire lampshades in Wicked.

Even as he rejects Baum’s concepts, Maguire does an admirable job of explaining away the multiple inconsistencies in the Baum books—particularly in explaining how people can eat meat in a land where animals talk, teach and attend dinner parties, and in explaining the varied and completely contradictory histories of Oz. (As I’ve noted, these inconsistencies never bothered me much as a kid, and I expect that they can be waved away by “magic,” but they clearly at least nagged at Maguire.) In Maguire’s Oz, some Animals can talk, and some animals cannot, and the conflicting histories of Oz are woven into its religious practices and propaganda. This absolutely works for me.

Tor

The need to lampshade the fact animals eat meat is one faced by most (if not all) writers whose characters are in animal form. Most humans are happy to eat bacon and eggs for breakfast, but what if your characters are pigs and chickens? What do you do then? You either have them eat jam on toast, fruits and cheeses (see the illustration of a breakfast scene in Mercy Watson Goes For A Ride).

As for Maguire,  for some fans of The Wizard Of Oz, he didn’t do nearly enough explaining when he wrote Wicked. Here’s an excerpt from the most-liked review currently on Goodreads:

Things That I Really Wish Gregory Maguire Had Bothered To Explain That Might Have Made Wicked Worth Reading:
-Why Elphaba is green
-Why Elphaba cannot touch water
-The “Philosophy Club” which seemed to be some sort of bizarre sex club which was introduced towards the middle of the story, and then never mentioned again
-How it’s physically possible that Elphaba gave birth to a son, but may actually not have, because she doesn’t remember it. (Maguire’s explanation is that she was drugged up on sedatives for the entire pregnancy and therefore cannot tell if she actually had a kid. Um…listen, Greg, I know you’re a guy, but I assure you, there is no drug on this earth or on Oz that makes a woman unable to remember giving birth)
-What the hell the Clock of the Time Dragon was, and how it’s able to give puppet shows revealing the Deep Dark Secrets of characters’ pasts
-Why Elphaba wanted the magic slippers so much
-The backstory of the Scarecrow and why he hated the Wicked Witch of the West. (The Tin Man and Lion are explained, but I guess by the time he had to come up with a story for the Scarecrow, Maguire had used up all his creative juices. As a result, the Scarecrow just appears with the others at the witch’s castle, and even Elphaba can’t figure out why the hell he’s there)

 Lampshading For An Audience Overly Au Fait With Story and Narrative

In her werewolf novel The Gift, Anne Rice lampshades the fact that she is using tropes from older stories, while also taking the opportunity to complain about horrible werewolf stories in pop culture. (If you know what she had to say about Twilight, you won’t be surprised):

In most of the movies the gift didn’t have much of a purpose. In fact it was unclear exactly why cinema werewolves went after their victims. All they did was rip random people to pieces. They didn’t even drink the blood or eat the meat. They didn’t behave like wolves at all. They behaved as if… they had rabies. True, in The Howling they had fun making out but other than that what was the good of being a movie werewolf? You howled at the moon; you couldn’t remember what you did and then somebody shot you.
— Anne Rice, The Gift, p90

lampshading