Annie Hall has a scene that is perhaps the best pedagogical tool to convey what subtext is. Alvy Singer (Woody Allen) is having a drink with Annie Hall (Diane Keaton). This is basically their first time alone together and there are definitely some undercurrents going on in with what they’re saying and Allen literally posts that subtext so viewers can read it — to great comedic effect.

                                     ALVY                           (pointing toward the                           apartment after a                           short pause)                      So, did you do shoot the photographs                      in there or what?

                                  ANNIE                           (Nodding, her hand on                           her hip)                      Yeah, yeah, I sorta dabble around,                      you know.

            Annie's thoughts pop on the screen as she talks: "I dabble?            Listen to me-what a jerk!"

                                  ALVY                      They're... they're... they're                      wonderful, you know. They have...                      they have, uh... a... a quality.

            As do Alvy's: "You are a great-looking girl."

                                  ANNIE                      Well, I-I-I would-I would like to                      take a serious photography course                      soon.

            Again, Annie's thoughts pop on: "He probably thinks I'm a yo-            yo."

                                  ALVY                      Photography's interesting, 'cause,                      you know, it's-it's a new art form,                      and a, uh, a set of aesthetic criteria                      have not emerged yet.

            And Alvy's: "I wonder what she looks like naked?"

                                  ANNIE                      Aesthetic criteria? You mean, whether                      it's, uh, good photo or not?

            "I'm not smart enough for him. Hang in there."

                                  ALVY                      The-the medium enters in as a                      condition of the art form itself.                      That's-

            "I don't know what I'm saying-she senses I'm shallow."

                                  ANNIE                      Well, well, I... to me-I... I mean,                      it's-it's-it's all instinctive, you                      know. I mean, I just try to uh, feel                      it, you know? I try to get a sense                      of it and not think about it so much.

            "God, I hope he doesn't turn out to be a shmuck like the others."

                                  ALVY                      Still, still we- You need a set of                      aesthetic guide lines to put it in                      social perspective, I think.

            "Christ, I sound like FM radio. Relax."And here's the scene.  The subtitles are about 2 minutes into the action.[youtube=http://www.youtube.com/watch?v=iNzWXgWJQaw]