What is the purpose of shielding and twisting in the UTP cables?

Answer 1

Shielding is not available for UTP cable; it would be for STP cable.

Both cable types use twists in the wire pairs. The twists help to eliminate crosstalk, which happens when a signal from one wire "bleeds" into another wire, causing interference.

Answer 2

Ethernet communications is actually an FM radio frequency carrier of around 800-900 Megahertz (It's broadband but I believe the centre is around 837 MHz. The radio waves are feed into the twisted pair in phase/anti-phase balanced feeder arrangement. This cancels out any radiation that is emitted from the feeder (twisted pair) and also cancels out any external interference. The actual data is sent as a frequency division multiplex signal from each card using CMSA/CD (Carrier Sense Multiple Access/Carrier Detect). Each burst is served using a first come first served system.

If it wasn't twisted the signal would radiate from the feeder allowing clever people to receive the signals and decode the packets at distance using radio receiver equipment. It would also unbalance the feeder leading to standing wave problems which would reduce the distance that the cable would carry a signal and possibly lead to the RF amplifier circuit to fail in the network card. Standing waves are one of the reasons you should not bend a network cable with a radius of less than 2 inches. Doing so causes the cable to interfere with itself.