The question is whether it is water, or a substance that happens to look and behave just like water. This, he believes, is obvious, and not intrinsically interesting. The interesting thing is what it tells us about the nature of meaning. That they are follows from the meaning of the terms. According to Putnam, what the Twin Earth thought experiment shows is that the following two statements cannot both be true.
Intension determines extension.
Putnam rejects the first statement, and retains the second. It is obvious however, that psychology and the speakers' intentions play some role in how a term acquires its meaning. What the stereotype does is to fix the reference of a given term, rather than to give the meaning of a term. To sum up, Putnam would argue the following.