Short for "Retroactive Continuity", a retcon is when an author writes a story that contradicts a previous canon event, and comes up with an explanation for why the new story should take precedence. One of the most famous retcons involved Marvel's Beyonder. Originally, the Beyonder was an effectively omnipotent being, described as being millions of times more powerful than everything else in the multiverse. He easily defeated most of Marvel's other cosmic beings. However, the company eventually decided that they didn't like idea of the Beyonder being that powerful, so they wrote a new story where it was revealed that he was simply half of a Cosmic Cube, and all of the other cosmic beings were simply playing around with him and tricking him before in order to make him think he was stronger than them. This weaker version of the Beyonder, who appeared in many subsequent stories, is often referred to as the Post - Retcon Beyonder, while the original version is referred to as the "Pre - Retcon", "80's", or "Classic" Beyonder. Same goes with Molecule Man also, while the original version is referred to as "Pre - Retcon", or "Classic" Molecule Man.
Another famous retcon was DC Comics' Crisis on Infinite Earths, where, essentially, the whole continuity was rebooted, making almost all of the stories up to that point no longer canon. Only a few characters and entities, such as the Spectre, the Fourth World, etc. remained unaffected.
Retcons are most notorious for happening in comic books, due to the huge amount of characters and contradictions caused by having so many different writers. However, they also exist in other forms of fiction. For example, in Dragon Ball, it was stated that Doctor Gero was the scientist behind the weapons of the Red Ribbon Army, and Goku said he remembered defeating him. However, Doctor Gero was never seen or mentioned in the original Red Ribbon army arc in the manga.
For the most part, retcons are reviled by fans, for their tendency to change canon in expected and often annoying ways (e.g. One More Day). However, retcons can also help remove events that are considered to be stupid or ridiculous (like Black Panther subduing the Silver Surfer, which was explained in a later comic as being because Surfer was a pacifist, and stated that he would have vaporized T'Challa if he was actually serious).