Quoting Chroma Hex [+1]:" You are wrong. That isn't what fanfiction means at all."
Actually, I believe she's right. It's when a fan of the story takes the characters and extends the story by creating stories based on them and possibly on settings within the original story.
"Fanfiction is what literature might look like if it were reinvented from scratch after a nuclear apocalypse by a band of brilliant pop-culture junkies trapped in a sealed bunker. They don't do it for money. That's not what it's about. The writers write it and put it up online just for the satisfaction. They're fans, but they're not silent, couchbound consumers of media. The culture talks to them, and they talk back to the culture in its own language."
—Lev Grossman, TIME
, July 18, 2011