Two Victorian-era magicians, one trick, and a film that hides its real subject in plain sight from the first scene.
Two London stage magicians, Robert Angier and Alfred Borden, begin as colleagues and end as rivals after an accident kills Angier's wife. The rivalry escalates over decades. They sabotage each other's acts, steal each other's tricks, and try to surpass each other. Borden invents a trick called The Transported Man — he walks into one cabinet and emerges from another across the stage — and Angier becomes obsessed with how it's done.
Angier crosses the Atlantic to find Nikola Tesla, who builds him a machine that may or may not be a transporter. Borden continues to perform his version of the trick by his own means. The film cross-cuts between the two men's diaries, with the structure of a magic trick: pledge, turn, prestige. The audience watching the film is being misdirected by the film itself.
Nolan and screenwriter Jonathan Nolan (his brother) structure The Prestige around the three-act form of a magic trick, which Cutter (Michael Caine) describes in voiceover at the opening: the pledge (the magician shows you something ordinary), the turn (he does something extraordinary), and the prestige (the part where you see what was hidden).
The film is itself executing this three-act structure on the audience. By the first ten minutes the film has shown you the trick's solution, twice, in plain sight. The misdirection works because of how confidently it's done. The film opens on top hats scattered in a field — already an answer to a question the audience hasn't yet thought to ask.
Bale plays Borden with a performative inconsistency that's meant to read as character flaw and is actually the central clue. The Borden the audience sees is, the film eventually reveals, two people — twin brothers who have lived their entire adult lives as one man, taking turns being on stage and being the assistant.
The brothers have committed to the bit so completely that one twin watched the other go to the gallows for a crime he didn't commit, because revealing the deception would have invalidated their life's work. The film's emotional pivot is the moment one brother says to the other, in their shared diary, 'You're the magician.'
Angier's version of the trick uses Tesla's machine, which is — the film eventually reveals — a duplicator. Each performance of the trick creates a copy of Angier; the copy emerges from one cabinet while the original drops through a trapdoor into a water tank and drowns.
Angier has been killing himself, or his copy, every night for years. The horror of the film's final reveal is not that magic is real — it's that Angier's obsession was so total that he was willing to commit the trick's solution as a literal sacrifice, every night, in front of a paying audience. The film's final shot is the water tanks. There are dozens.