Retcon
The term retcon is a contracted form of the phrase "retroactive continuity". According to the rec.arts.comics.misc FAQ, the term was coined by one Damian Cugley, and its first recorded use is by comics-author Roy Thomas, where he used (and reported hearing) the term in a letter column.
In general usage, "retcon" refers to a new development in a story that changes the interpretation of past stories in a way that the original story-writer almost certainly did not intend at that time. It can also refer to a new development which contradicts and overrides some aspect of an earlier story.
Examples
In the most strict version of the definition, a retcon in a story is any "newly revealed" information which begs a reinterpretation of past events but which does not actually change those events. For example, at the end of Beast Wars' second season, it was revealed that Tarantulas was an officer of the Predacon Secret Police and had joined Megatron to keep an eye on him. This changes the viewer's perception of Tarantulas: rather than being merely out for himself, he had been operating a very specific agenda from the start while still, of course, being out for himself as well. This development does not contradict previous stories, and adds a layer of depth to them that was not there before.
The introduction of the Autobot Matrix of Leadership in The Transformers: The Movie is a more clunky retcon. Upon viewing the movie, fans are asked to accept that Optimus Prime had been carrying the Matrix around with him for the last two years of cartoon episodes. Despite being a unique and cosmically powerful artifact with monumental importance to Autobot history and culture, it had never been relevant to the plot or even mentioned in passing. Still, there is no blatant contradiction here; the closest fans get are a few views or scans of Prime's interior which show no sign of the Matrix's housing. There are a lot of ways one can justify the Matrix's apparent absence. So this retcon still does not really contradict anything, but it is harder to swallow.
