Very simply, washout is either a physically twisted wing or an aerodynamically twisted wing.

If you look at a wing from directly behind, you expect the TEs to be straight and to see exactly the same amount of top wing as you see of the bottom wing. You expect the TE to be straight behind the wing. No part of it is above or below where you expect it to be.

That same wing would have the TE moving upward as it moved from the fuselage out toward the tips if it was washed out. That is physical washout.

The idea is to have the middle of the wing stall before the wing tips stall. Or to have the wingtips stall after the middle of the wing stalls. Since a stall comes from excessive angle of attack, if you twist the wing so the tips fly at less angle of attack than the rest of the wing, they're not going to stall when the rest of the wing starts to stall.

You can also design that into a wing using the airfoils. You use an airfoil for the tips that stalls at a larger angle of attack than the airfoil that's in the middle of the wing. If you looked at the back of that wing, it wouldn't look twisted up toward the tips. But it would have aerodynamically wash out.