Fusion: refers to a special brand of AU Crossover in which the characters of one fandom are transposed into the reality of another. It is a way of writing an interesting alternate universe for one fandom without worldbuilding a new reality from scratch. Often, the canon characters of the secondary reality do not appear (or possibly even exist) in the story and therefore fusions may not necessarily count as true crossovers.
See also: AU, Crossover and/or Worldbuilding
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A-Z Fanfiction Guide: Terms to Know
RandomAn A-Z List of all the fanfic terms YOU should know! (Cr. Goes to Angerfire.com for references and information) * this will be updated periodically, so if some things are missing, they haven't been added yet.