The canonical tag was jointly introduced by Google, Yahoo and Microsoft earlier this year. Google hinted they would soon support cross domain canonical tag and they officially announced it last night. What is a canonical tag? It basically allows you to communicate to Google that a page has moved to a new location, without you using a server side 301 redirect.
Why is this important? A few reasons:
(1) Some hosts don't allow webmasters to deploy 301 redirects (2) Some site owners aren't technical enough to implement a 301 redirect (3) In some cases, webmasters do not want to redirect users but rather only search engines (i.e. pagination, weird filtering, tracking parameters added to URLs, etc).
Initially this was launched to work within a domain only. So you could only say that domainA.com/pageA has moved to domainA.com/pageB. Now you are able to do this across domains, so you can say, domainA.com/pageA has moved to domainB.com/pageA or even domainA.com moved to domainB.com.
Google made this cute graphic to explain it:
There is a lot of technical detail on how to implement this tag over here but in short, you just add this tag to the head section of your HTML of the page you want to redirect. Make sure the URL you specify is the URL you want GoogleBot to be redirected to:
<link rel="canonical" href="http://www.example.com/true-url.html" />
JohnMu, who wrote the Google blog post also put some FAQs, and note the "hint" he keeps referring to. I assume the "hint" will become less of a hint and more of an "instruction" as time goes on.
Q: Do the pages have to be identical? A: No, but they should be similar. Slight differences are fine.
Q: For technical reasons I can't include a 1:1 mapping for the URLs on my sites. Can I just point the rel="canonical" at the homepage of my preferred site? A: No; this could result in problems. A mapping from old URL to new URL for each URL on the old site is the best way to use rel="canonical".
Q: I'm offering my content / product descriptions for syndication. Do my publishers need to use rel="canonical"? A: We leave this up to you and your publishers. If the content is similar enough, it might make sense to use rel="canonical", if both parties agree.
Q: My server can't do a 301 (permanent) redirect. Can I use rel="canonical" to move my site? A: If it's at all possible, you should work with your webhost or web server to do a 301 redirect. Keep in mind that we treat rel="canonical" as a hint, and other search engines may handle it differently. But if a 301 redirect is impossible for some reason, then a rel="canonical" may work for you. For more information, see our guidelines on moving your site.
Q: Should I use a noindex robots meta tag on pages with a rel="canonical" link element? A: No, since those pages would not be equivalent with regards to indexing - one would be allowed while the other would be blocked. Additionally, it's important that these pages are not disallowed from crawling through a robots.txt file, otherwise search engine crawlers will not be able to discover the rel="canonical" link element.
Forum discussion at Google Webmaster Help.