Short for fanfiction. The act of creation where a writer takes existing characters from a book, movie, TV show or videogame and creates new situations and storylines. Generally not done by professional writers. If so, and payment is made, it falls within the category of media tie-in.
Today Amazon announced their new author program, Amazon Worlds. This is the latest entry to a cadre of products such as Kindle, Kindle Singles, and others. This new initiative takes aim not at totally original work or author-owned creations but at fanfiction, defined above. While this is exciting news and a brand new market for Amazon, it certainly comes with some pros and cons. Lots of cons. First: the pros. It seemingly legitimizes fanfic, and even pays the authors for it. So it's possible that many fanfic writers out there who have written scads of Star Trek material could actually pull a paycheck in the near future. The cons: it's a one-time payment, and everything they write becomes 100% owned (in different ways) by Amazon and the original material's copyright holder forever and ever. The breakdown is this: the material you write, including original story plotline, any new characters and situations become the franchise owner's property. So if you created a new Star Wars character in your story it becomes the property of LucasArts/Disney, and when you see a doll of your character in Toys R Us you won't see a penny from the sales. Memo from Disney: Sorry, but thanks for the great idea!
Also: Amazon can do whatever it wants with your story. It can re-sell it, re-package it, put it in an anthology, all without paying you any more money. From my point of view it certainly seems like the fanfic writer doesn't get much for their writing, although the point can certainly be made that they've done it until now for nothing. So they're ahead in that sense.
My take: personally I like creating my own worlds to play in. My own characters, situations, settings, etc. I think it's safer that way and everything belongs to you. However I'm sure this announcement will appeal to many fanfic writers eager to get paid for their Dr. Who manifesto. It will be interesting to see how this plays out and is accepted by both franchise owners and fanfic writers.