Official Google Webmaster Central Blog: Specify your canonical
http://googlewebmastercentral.blogspot.com/2009/02/specify-your-canonical.html

Google's way of allowing sites to specify a normalized URL form for their pages. This allows google to treat various forms of the same URL as one URL for search purposes.

Carpe diem on any duplicate content worries: we now support a format that allows you to publicly specify your preferred version of a URL. If your site has identical or vastly similar content that's accessible through multiple URLs, this format provides you with more control over the URL returned in search results. It also helps to make sure that properties such as link popularity are consolidated to your preferred version.

webmaster central

If tags conflict (such as pages point to each other as canonical, the URL specified as canonical redirects to a non-canonical version, or the page specified as canonical doesn’t exist), search engines will sort things out just as they do now, and will determine which URL they think is the best canonical version.

Specify the canonical version using a tag in the head section of the page as follows: <link rel="canonical" href="http://www.example.com/product.php?item=swedish-fish"/> That’s it!

Canonical explanation.