The classic example is an "explanation" of visual processing in which an image is recorded by the retina, conveyed by the optic nerve, and then transmitted by the visual cortex to the rest of the brain, which "sees" everything. While it is true that images are recorded by the retina and conveyed to the rest of the brain by the optic nerve, this does not explain how the brain processes visual data. Instead, one imagines something like a little person or a floating consciousness (the "homunculus") who does the real work.
This position is typically refuted by arguing that this requires an infinite recursion: if we then ask how the homunculus "sees", we would start with how its "eyes" take in data, and feed them into its own little visual cortex, where we are faced with the same problem again.
This is a mysterious answer, but not a semantic stopsign. If someone answers questions of the form "why do humans do X" with "free will", and answers "why does free will do X" with "free will is free; you don't get to ask that!", this is a semantic stopsign type mysterious-answer. Like vitalism, this person is explicitly trying to make an explanation mysterious. The homunculus fallacy is more like phlogiston: an attempt at a reductionistic answer which fails. From Mysterious Answers to Mysterious Questions:
Vitalism shared with phlogiston the error of encapsulating the mystery as a substance. Fire was mysterious, and the phlogiston theory encapsulated the mystery in a mysterious substance called “phlogiston.” Life was a sacred mystery, and vitalism encapsulated the sacred mystery in a mysterious substance called “Élan vital.” Neither answer helped concentrate the model’s probability density—helped make some outcomes easier to explain than others. The “explanation” just wrapped up the question as a small, hard, opaque black ball.
In a comedy written by Molière, a physician explains the power of a soporific by saying that it contains a “dormitive potency.” Same principle. It is a failure of human psychology that, faced with a mysterious phenomenon, we more readily postulate mysterious inherent substances than complex underlying processes.
But the deeper failure is supposing that an answer can be mysterious. If a phenomenon feels mysterious, that is a fact about our state of knowledge, not a fact about the phenomenon itself. The vitalists saw a mysterious gap in their knowledge, and postulated a mysterious stuff that plugged the gap. In doing so, they mixed up the map with the territory. All confusion and bewilderment exist in the mind, not in encapsulated substances.