Original Character

OC stands for original character, that is, a fanfiction character that does not occur in canon. OCs breed like rabbits in the world of fandom. Anytime Legolas' fantastic new princess rears her sickeningly beautiful head, you have an OC on your hands.

It is one of the unfortunate side effects of the Mary Sue fanfiction invasion that OCs have earned a bad reputation among canon purists. In fact, there is nothing wrong with the concept of an original character being introduced to canon in fanfiction. It is simply the case that a) for every well-written OC, there are dozens, if not hundreds, of OC Mary Sues, and b) fanfiction without OCs is almost always better written than fanfiction with them. The more prominent the OCs are in the story, the worse the fanfiction is likely to be—and the better odds you have of finding a Mary Sue. Hint: if you are not capable of writing a fanfiction where no new OC is introduced into canon, you should stick to original fiction and leave canon alone.