Canon is the official continuity of a franchise...it's what "really happened." What counts as canon depends on the franchise, as they all have different definitions.

If a part of a franchise is considered canon, that means the fans should expect other canon to respect what happens in that part, and not overwrite it; if something canon is ignored in other parts of canon, it becomes confusing.

For example, if your franchise is primarily a TV show, but it also has tie-in novels that you consider canon, then the writers of the TV show have to make sure that events in the show don't contradict events in the book, and vice versa.