From Diablo Wiki
Canon is traditionally a biblical term for what is accepted within the Christian faith. In gaming terms it means that a piece of fact usually associated with lore is officially supported by the creators of the lore/game.
Canon in Diablo
For example, Diablo I had an expansion called Diablo I: Hellfire, which is an official expansion, but not made by Blizzard. The D3 Team has chosen to exclude this official expansion from the canon part of the Diablo lore, so anything you read or did in the expansion material never happened.
Information that IS canon can also be retconned, to become outdated, and no longer canon.
Blizzard on canon
Chris Metzen has emphasised the importance of continuity within the Blizzard universes. Here talking about the WarCraft universe:
- We're taking the process of building a world seriously and it wasn't just churned out. It had a strong sense of continuity. We've always tried to do that with our ancillary products like the D&D line and our novels. We are kind of painstakingly anal, about making sure all the details add up, that continuity is held to be sacred. So that no matter in what medium you are experiencing Warcraft it all feels like a contiguous experience.
Basically everything Blizzard releases is canon, including franchise merchandise like novels, comics, manga etc. There are a few questions marks here and there, but on the whole, anything with a Blizzard logo on it is canon. Exceptions include the Diablo I: Hellfire expansion, which was licensed by Blizzard, but created by Sierra. The Diablo: Demonsbane novel is probably canon, but no official word has been made by Blizzard.
There are a number of inconsistencies in the Diablo Universe, and Blizzard is taking steps to unify all information as well as they can with the production of Diablo III. Bashiok commented on this and has given us guidelines to interpret data:
- We've known about some of the inconsistencies for a while, and there's an ongoing project to convert a lot of our internal documents to a standardized dating system to help correct them. Hopefully to be completed soon.
- Meanwhile, the timeline on the website is infallibly canon. Everything else falls to it for correct dates.
DiabloWiki is archiving both canon and non-canon lore, but will clearly mark if a part of the material here is not canon.
Here are a few examples of content on DiabloWiki that is NOT canon.