What does canonicalization mean?
The process of selection of URLs for a set of specific content. Modern websites will generally allow their content to be accessed from not one but several URLs that contain query information. The process helps in managing which of the URLs are being indexed and credited by the search engines.
In SEO, URL Canonicalization deals with sites that have more than one URL, only one of them being recognized as the canonical form of the URL. An example of a website that has more than one URL would be http://wikipedia.com, http://www.wikipedia.com, http://www.wikipedia.com/, http://www.wikipedia.com/?source=asdf, all of these URLs pointing to the same website.
Canonicalization will tell the search engines which page should be considered the master copy of the page. This helps avoid duplicate content issues, and also serves to combine all the incoming link weight to one page as well. In practice, canonicalization tells the search engines which version of a page they should be showing in search results, and which copy of a page should have traffic sent to it.
The issue of duplicate content on your site is complex, but to simplify things just realize that when the search engine spiders crawl your website and there is a lot of duplicate content they may miss your original content. In addition, a large amount of duplicate content could lower your ability to rank in the search engine results. Having multiple versions of the same page also runs the risk of the search engines picking the wrong version to use as the master version of the page. So, canonicalization can help you to control your duplicate content.