As cgnieder's excellent answer says, \unexpanded is a primitive of e-TeX, that is, an extension of the original TeX language. Primitives don't have a definition, they're commands directly understood by the engine. Some of them are expandable, that is, they don't reach TeX's “stomach” because they are expanded just like macros (the same happens to the conditionals, for example); \unexpanded is one of these macros.
It's a generalization of \noexpand which, in the context of an \edef or a \write, has a null expansion but also the effect of making the next token unexpandable for the task at hand. Thus
\def\foo{something}
\def\baz{else}
\edef\x{\foo\noexpand\baz}
would be equivalent to
\def\x{something\baz}
With \unexpanded you can protect from expansion in an \edef (or \xdef) or \write an entire token list, without the need to prepend \noexpand to all expandable tokens.
Since \unexpanded follows the pattern
\unexpanded <general text>
it has an interesting feature. When TeX wants to expand it, it looks forward to find a <general text> which is defined as
<filler> { <balanced text> <right brace>
and expands tokens to recognize a <filler> and, eventually, the {. A <filler> is just an arbitrary sequence of \relax and space tokens which are simply ignored. The { is an explicit or implicit token of category code 1.
A consequence of this is that
\unexpanded\expandafter{\cs}
will cause the expansion of \cs before the { that starts the list of tokens which will not be expanded any more. Indeed, the definition of \expandonce is
\newcommand{\expandonce}[1]{\unexpanded\expandafter{#1}}
Also \detokenize (another expandable primitive of e-TeX) has the same properties.
Beware of the <filler>: it can cause some unexpected effects under certain circumstances as shown in Get the lion to run in loops. Tersely
source2e. – Sean Allred Oct 26 '13 at 15:55\unexpandedis an eTeX primitive, have a look at the eTeX manual – cgnieder Oct 26 '13 at 15:55eTeXstuff? Or how would I usedtexdefto show the source code? – A.Ellett Oct 26 '13 at 16:04texdeffor\unexpandedis the same as trying to use it for say\defor\relax: you won't get anything. As it's a primitive, the source is in WEB (a form of Pascal), but unless you really need the detail then I'd go with the engine manual (eTeX in this case). – Joseph Wright Oct 26 '13 at 16:17