Twilight represents the realm in between Light and Darkness. It borrows powers from both forces, making it possibly the most powerful of all three. It is relatively unknown as even King Mickey was not aware of it until realizing the path Riku took. This is the force that all Nobodies(including Organization XII, though they have seperate "elements" based on different spells which are the basis of they're powers) draw they're energies from. DiZ refers too this path as "the twilit road to nightfall" but Riku calls it "the road to Dawn". Xemnas refers too it as "Nothingness". It makes up what is between the Realm of Light and the Realm of Darkness(The crossroads and Castle Oblivion are found there).
It is never fully established, but it is assumed that Riku's keyblade "Way to the Dawn" is the Keyblade that represents the Twilight realm, as he finally realizes his place after Chain of Memories and is finally able to wield it, not too mention he was initially the person too wield the Keyblade of Light(and of course, the name).