What is canonical link element?
This is a new, optional directive, that helps to specify the original url of a page.
How it works?
For example, let’s have a page with parameters like this:
Parameters can be session id or anything else. If their value is not relevant to the page we can specify our original (canonical) url in the head section of the page:
We can specify canonical url to a section/page:
In short - canonical link element helps identify different links to one page.
More about canonical link element can be found at Matt Cutts blog here. And here is Google help information about it.