Seen on sagittal images, the bow-tie represents the continuity of the meniscus between the anterior and posterior horns. It is normally seen on 2 contiguous sagittal images. When it is seen on 3 or more contiguous 5 mm thick sagittal images is indicative of a discoid meniscus.
Reference
Araki Y, Yamamoto H, Nakamura H, Tsukaguchi I: MR diagnosis of discoid lateral menisci of the knee. Eur J Radiol 1994 May;18(2):92-5.
Silverman JM, Mink JH, Deutsch AL: Discoid menisci of the knee: MR imaging appearance. Radiology 1989 Nov;173(2):351-4.