A retcon (short for "Retroactive Continuity") is a storytelling tool in which previously-unrevealed past events are revealed. Often, this results in changes that overwrite what was previously known about the situation or character being retconned.
Some LNH characters have the ability to cause retcons, actively changing the past through an effort of will. This power can be dangerous to the fabric of reality, and often carries with it the danger of unfortunate consequences if the way the retcon fits into past continuity is not properly explained.
As well, magic in the Looniverse is powered by retcoether, the energy of retcons in its purest state. Retcotheric energy is intimately entwined with the creation of the Looniverse, and flows like a river through the world.
See also the Ring of Retcon and Retcon Hour.