For those unfamiliar:
Fanfiction: essentially a continuation, insertion, or specification of an original work. The practice of fanfiction began somewhere around the 18th century, after fictional stories became the works of one author in particular, and not of a general culture. This privatization was opposed by the start of fanfiction, which sought to re-extend popular stories to the public, by allowing every reader and writer a chance to add onto their favorite stories.
Fandom: a following that forms around an original work, usually a book, movie, or show. The word itself arises from a amalgamation of “fanatic” and “kingdom.”
Canon: an original work on which a fandom expands. Examples include books, movies, shows, webcomics, video games, and occasionally, real life. The word is adapted from the traditional religious use, and serves a similar purpose: the source material, whether it be fiction or non, acts as a rule book, filled with guidelines as to how the characters act, and how their world functions. Canon that provides a great amount of specifics can sometimes limit the innovation of the fandom, but can also provide better structural support for fan works. Canon can also be a source of fierce debate, when members of a fandom disagree on how the material should be interpreted. Arguments most often form over individual characters or perceived relationships. This leads to conflict within the community, which can occasionally be rectified with the intervention of the author, but more often, results in a long-standing division between the sects.
Extracanon: essentially second-rate canon, extracanon is all the information released about canon after the canon storyline has been completed. This includes opinions from the author and actors, rough drafts, deleted scenes, and graphic novels/novels/audio tapes. A large part of the fandom will never watch, read, or listen to these. A large part also will have no idea they exist. Extracanon’s place in canon is highly debated, as many fans will use certain extracanon as proof of a theory. Those same fans will later turn away another piece of extracanon because it denies a different theory. In the end, it’s all very subjective.
Fanon: a concept agreed upon by a large part of the fandom of piece of canon, but which is not explicitly or not at all supported by the canon itself. Fanon most frequently takes the form of over-exaggerated character traits or character appearances. Examples include certain catchphrases from characters who only said the line once, certain implausible biological processes, and certain personalities based on wishful thinking. Fanon is often used in a derogatory sense to mock a certain idea, and to say that it is false, silly, or cliché. However, most fanon goes entirely unnoticed by the fandom, as it is so close to canon it can barely be considered anything else. Occasionally, this kind of fanon is so convincing that it is incorporated into extracanon.
Headcanon: fanon, but not as widely accepted. A headcanon is a fan’s personal idea, which they might decide to distribute among their fandom. If a headcanon is successful, it becomes fanon, where it may in turn be accepted into extracanon, where it becomes pseudo-canon; thus goes the evolution of ideas within a fandom.
Insertion Fanfiction: adds new plot into the midst of the canon story. This is different from a prequel or sequel in that it inserts itself directly into an existing plot line, between chapters, episodes, updates, what have you. These fanfictions tend to be standalone, but rely on a knowledge of the canon in order to be properly set and understood. Insertion fanfiction is restricted by the canon in its past and future, but also often draws on canon for inspiration and support.
Continuation Fanfiction: exists outside the storyline of canon, and adds to or edits the ending. It is probably the oldest kind of fanfiction, and is also the most easily understood by people outside the fanfiction community.
Specification Fanfiction: delves into the gritty details or the inner thoughts of a character, and hinges on a particular scene. A specification fanfiction is somewhat of a variation of insertion fanfiction, but is usually much shorter. This fanfiction doesn’t really add any events into the storyline, but instead elaborates on details that the author mentioned offhandedly, or on a scene that the fanfiction writer felt was not properly written.
Alternate Universe Fanfiction (AU): takes only the bare essentials of the story, and exists almost entirely independent of canon. AUs draw off of characters and their perceived personalities, but place them in a new setting separate from canon. This is often done for shipping purposes. Settings range from historical to modern day to space to bands to high schools to coffee shops to abstract ideas.
Shipping: the practice by members of a fandom of desiring a relationship to form between characters; hence the name, a shortened version of relationship-ing. Shipping is a strong theme in many fan works, and often defines its community. Some fans join a fandom purely because of a ship, and others avoid the practice, sometimes with good reason: ships are not always realistic, well-written, or ethical.
One True Pairing (OTP): the favorite ship. Not necessarily, and not usually, limited to one pairing, OTPs are a shipping fan’s reason for living. Fans will seek out fan works that fulfill the desire to see this ship play out, in the likely eventuality that it never will canonically.
OT3: the favorite threesome. An unusual ship, an OT3 is a desired relationship between not two, but 3 characters. The added individual to the relationship complicates things tremendously, and as you can imagine, angst is a common feature in these ships. Nevertheless, the detail and balance required makes these theoretical partnerships fascinating. The abbreviation OT3 doesn’t actually stand for anything, but is instead a play off of OTP. Another habit has sprung up around this pseudo abbreviation, used for polygamous ships: any ship with more than 2 partners is usually classified as an OT[# of partners]. For example, a foursome is an OT4, a sevensome an OT7… etc. Each higher number is an exponentially rarer species of ship to find, simply because of the complexity needed to make it believable.
Rare Pair: an uncommon ship. Rare Pairs tend to be between minor characters, or characters that don’t interact often in canon. Although they don’t receive a lot of love, and more than often only get strange looks, Rare Pairs are just as able to add to the perception and appreciation of canon as any mainstream ship.
Fluff: is usually used to describe something trivial, but in fanfiction communities, indicates the presence of happiness. Fluff is cuddling, cuteness, joking around, the general practice of having fun.
Angst: the opposite of fluff, angst exists to make its reader wish they had never found this fanfiction in the first place. Angst is all of the distrust, pain, death, and general bad things that come about when a character is treated terribly, or when characters treat each other terribly. However, angst can be used as a tool to encourage characters to deal with their problems, to better their situations, and to fix their relationships. For all its sadness, angst is a necessary piece to a truly satisfying fanfiction, and without it fanfiction would be happy, colorful, and utterly meaningless.
Smut: the literary form of porn. My rating of smut also includes all forms of shipping, with the higher rating indicating more explicit relationship happenings.
Out of Character (OOC): a byproduct of poor writing, is evident when a fanfiction writer doesn’t understand the characters, and portrays them improperly.
Original Character (OC): a character in a fanfiction who did not exist in canon, but was instead added by the fanfiction writer. OCs are usually minor characters, and aren’t mentioned in the tags.
Mary Sue: an OC that has gone too far. A Mary Sue is a character that actually serves as a self-insert into canon. Identified with her perfection, Mary Sues are this writer’s way of interacting with their favorite characters, under the pretense of fanfiction.