Sometimes, this is done with constructive intentions, such as correcting or consolidating canon material written by different individuals, or to fix a technical error made earlier in a work. Other times, it is done in the interests of extending a television show or anime by artificially prolonging the plot, or simply because the creators may decide to ignore an aspect of a canon when they create more. The retcon may be ambiguous (which leads to a lot of arguing in the fanbase) or it may be very clearly defined in the canon or even stated outright to overwrite previous material by the creators.
When a retcon occurs, the fans of the material will likely divide into two factions: one that likes or at least honors the retcon, and one that continues to uphold the old material. Both groups are equally likely to create goodfic as well as badfic, though when the fic is bad it will often vary in structure. Fans that support the retcon might begin changing other canon material to 'match' it even if it's not material specified as part of the retcon. Fans that reject the retcon might bash characters involved or smear anything that endangers the idea they're trying to protect. Very often, this treasured idea is a favorite shipping pairing.
Retconning is a common problem with comic book continua, and makes dealing with comic book badfic hard due to the problems of ever-changing canon. Retcons also effect television series, especially from season to season when new information may be revealed that changes the meaning of previous material. The universes in video game series are also vulnerable to retcon. Expanded Universes of many fandoms with multiple comics or books may even have retcon wars, with each individual writer holding their own canon and fighting against the canon of other writers.
Fanfic writers cannot actually retcon canon, but they can retcon their own work.
Retconning in the PPC
Because retcons are canon, the PPC has a duty to defend them when they are assaulted in badfic, even if doing so may seem unpleasant to some.
Unsurprisingly, given the PPC's nature as a cooperative reality, it has itself undergone one or two retcons: most notably, the controversial 'death' of Makes-Things. Although he was stated to have irrevocably died in the Macrovirus Epidemic, his subsequent return rendered that statement suspect at the very least, if not outright disproved. Since the manner of his return was left intentionally vague by Neshomeh , theories in-universe and out vary as to whether he really died at that time and was somehow resurrected or whether he escaped and simply took his time coming back.
For the same reason fanfic writers can't retcon the works they're writing about, although the PPC can and does evolve over time, the Original Series cannot be retconned.