Canon - Fictional Universe
Canon is basically fan fiction which is contained within the premise of the original masterpiece. A true ode to the original work by the author, the word 'canon' originates from the books which the Catholic Church accepted to be a part of the Bible. So basically it is a piece of work that includes a small or a sizeable segment of the original work that is created by the original author or the very first person who came up with the idea.
In make believe land, canonicity is quite subjective. It deals with a mutual 'understanding', if any, between published creative matter of a fictional series and the level it is absorbed and accepted by a wide audience. The audience in such cases refers to quite a vocal one. Now this is because canon can be used to refer to both the thoughts of the poor chap who thought of it first and what the fans consider as authentic.
The term Canon
The term is interchangeably used as a noun, as well as, an adjective. As an adjective, canon means a character, event or plotline that is the original professional source of information. All this noise about the degree to which an original composition sticks to the principle and standards of the fictional world was initially created by Sherlock Holmes aficionados. They used it as a means to distinguish between actual work of Arthur Conan Doyle and 'inspired' work by fans that use the same characters and settings. Recently, even Star Trek and Star Wars fans have raised the issue. In the Star Trek Fanfic forum, canon is jokingly referred to as The Dreaded Canon or TDC.
All this talk about canons makes one wonder that if canon is the original, published genius of one man then what makes up non-canon? Non-canon is created by inspired artists who create spin-offs, fan fiction or any original work that is using the same thought, idea, design, plotline, characters etc. like the original author's work.
The Buffyverse canon, for example, consists of not only the television series 'Buffy the Vampire Slayer' and Angel but also assorted comic books. And the popular role playing game Dungeons and Dragons never really had an official, universally proclaimed canon. The prerogative was with the Dungeon Master from the very beginning of the game and even up until now. Upon his or her discretion, the Dungeon Master decides the published works that will be canonical in the particular campaign and the rules that apply to it.
Most popular works have dedicated websites which have canons submitted by fans. A tour through these will set you up to start on your very own canon, for your own favorite story, series or movie.