Center squeeze
The center squeeze effect refers to a class of voting scenarios which are troublesome for many voting systems. In such a scenario, the strongest three candidates can be arranged on a spectrum such as "left", "center", and "right"; and of the three, the "center" candidate is the Condorcet winner or utilitarian winner, but loses the election.
Most consider that if the center candidate is not too far behind in honest plurality, they should be the winner, as they would beat any other candidate in a head-to-head election, and otherwise the voting system is encouraging strategy (typically, a favorite betrayal) from one of the other two groups.
(Note that "center" does not refer to an absolute political spectrum, but relative to the ideologies of the voters. If the Libertarian Party holds an election, for instance, the winner should be near the center of Libertarian ideology.)
The effect is not limited to 3 candidates: The more candidates there are crowding the center, the less likely they are to win.
Three-candidate example
For example, on a 2-dimensional political compass with 3 candidates, candidate B is the Condorcet winner and utilitarian winner, but is squeezed out by A and C on either side:
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Either way, the winner is not as good of a representative of the electorate as candidate B.
With more candidates
Center squeeze can occur under FPTP and two-round runoff with any number of candidates. If the center candidates are close enough together, honest votes will be split between all of them, electing the worst (FPTP) or second-worst (T2R) candidate.
A similar effect can occur under IRV, electing the second-worst candidate, though less extreme, since eliminated candidates transfer votes to nearby candidates, making it harder for them to be eliminated.
Prevalence
Voting systems which have serious problems with center squeeze include FPTP, two-round runoff voting, and IRV.
Systems which can do either well or poorly in a center squeeze situation include most graded Bucklin systems and score voting.
Systems which generally do well with center squeeze include Condorcet systems (although in some cases, a center squeeze scenario could become an opportunity for one of the wings to use burial strategy and create an artificial Condorcet cycle).