Question: What is URL canonicalization or a canonical URL?
Answer: Canonicalization is the strange word Google uses to describe the process of picking the best URL when they see more than one choice (example below). According to Matt Cutts it usually refers to the URL choices of the home page. For example, although a lot of people would consider these the same URL`s:
…they are all technically different URL`s (intended to all point to the HP). Because they are unique, a web server can return different content, images, etc for all the URL`s above. When Google "canonicalizes" a URL, they go through the process of picking one URL, generally the one that makes the most sense for the site.
To help Google pick the one you want, decide on the best suited URL for internal linking and use that format consistently throughout the site. Beyond consistency in the internal linking structure, you should also do a permanent 301 redirect from any other formats to the desired URL. Doing this helps Google better understand which URL you prefer to be canonical.