Canon is a fandom term that is used to describe a source, or sources, that are considered authoritative by the fannish community. In other words, canon is what fans agree actually happened in a book, film, television show, etc.
For example, it is "canon" that Brian Kinney, Justin Taylor, and Emmett Honeycutt in the television show Queer as Folk are all gay men. Brian and Justin were involved in a romantic and sexual relationship on the show, so their relationship is also considered "canon." On the other hand, Brian Kinney and Emmett Honeycutt were never involved in a romantic or sexual relationship on the show, so any depictions of such a relationship in fanworks are considered non-canon.