When you misjudge someone, you have mistaken ideas about what they're like. Politicians who misjudge their constituents aren't often reelected.
If you've ever found yourself jumping to conclusions about someone after meeting them once, and then realizing they aren't the way you thought they were, you know what it is to misjudge someone. If a tennis player misjudges her opponent, she's likely to miss an unexpected shot and lose the match. When you judge, you form an opinion about someone or something. Now add the "bad or wrong" prefix mis-, and you've got misjudge.