Step 1: An omphalocele is a central abdominal wall defect at the umbilicus where viscera bulge out within a membrane-covered sac made of amnion and peritoneum.
Step 2: Normally the rapidly growing midgut temporarily herniates into the umbilical cord and then retracts back inside the belly during about the 6th to 10th weeks of fetal life.
Step 3: If that retraction fails and the bowel never comes back into the cavity, the organs stay outside under the covering, which is precisely an omphalocele.
Step 4: Duplication, abnormal rotation, and reversed rotation are separate rotational or structural problems and do not explain this defect.
\[\boxed{\text{Failure of gut to return from physiological herniation}}\]