In phone interviews, I always ask the candidate to tell me what he or she knows about the job so far. It's surprising how many people reveal in response that they either have a complete misunderstanding of what the job entails, maybe because they haven't bothered to read the job description since applying two weeks ago. (Keep in mind that these are all scheduled phone interviews; they had time to prepare in advance and aren't being caught off guard by the call.)
Obviously, this is a huge strike. It's close to impossible to recover from, because why am I spending my time interviewing you for a job that you obviously aren't prepared to talk about, when there are hundreds of candidates who would be prepared?
I had this happen twice today (probably because I'm hiring for an entry-level job, and that's where you find the highest proportion of silly interview mistakes). But the two candidates couldn't have handled it more differently. The first candidate described a job I bet he'd like to have, but it's not the one I'm interviewing for. He was so ridiculously off that I asked him when he had last read the job description. His response? "I'm so tired right now that I can't remember what it said." No, seriously. With no inkling that there was anything wrong with saying that.
The second candidate also got it wrong, but when I explained to her that actually the job wasn't doing Y, but rather Z, she was mortified. She apologized profusely, and said was horrified, and when we were ending the call a little later, she apologized again. There's no doubt in my mind that she understood exactly how she'd messed up and that she cared, a lot.
The first guy is getting an instant rejection. The second candidate -- well, I might come back to her. She's not in the top tier because she didn't prepare, and there are tons of candidates who did. But she handled it well enough that if none of my other candidates wow me, I'd be willing to talk to her again. If nothing else, she's certainly someone I'd be willing to consider if she applied again in the future.
So how you handle mistakes matters. And recovery is possible.