"The unit is caught off guard, thinking the enemy is not a large threat. The effect of attacks is lowered. This will last as long as the unit that inflicted this status is not Incapacitated ." -Status Encyclopedia
Unwary units have a reduction in the effect of their attacks.
How to AttainEdit
Unwariness usually occurs when a unit, from Lololo or the Resistance, engages an enemy unit in such a way that would make them look harmless, or less of a threat. (e.g, looking adorable, engaging in friendly conversation) There do not appear to be any additional effects, though unlike most Statuses, Unwariness does not fade until the unit with the Status is Incapacitated.
Sometimes, enemy units will become Unwary while an ally unit tries to recruit them.