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It's a metaphor for something that works properly out of the box, with minimal-to-no fiddling with things. Turnkey, I believe, comes from automobiles, where you turn the key and it just runs. Same idea.

 

Example: WordPress (yuck) is largely turnkey. You install it, enter some basic info, and *boom*, working blog. An Xbox 360/PS3/Wii/whatever is turnkey as all you have to do is plug it into a wall outlet and a TV for it to work.

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