Search and the web
The one address a piece of content declares as its real one, so that every variant of it consolidates into a single entry rather than competing with itself.
The same page is usually reachable at several addresses — with and without a trailing slash, with tracking parameters, over both hostnames, in a printable version. Without a declared canonical, a search engine has to guess which is the original, and the ranking signals split across the copies.
A canonical must point at a URL that actually answers with a 200. Pointing it at an address that redirects is a common and quietly damaging error: every page then describes itself by a location it does not live at.
A site served on www that canonicalises to the bare domain — or the reverse — asks the engine to index an address that only redirects. Pick the host that answers, and make the canonical, the sitemap and the structured data all name that one.
The definitions are the easy part. Whether the figure on your dashboard was computed this way is a different question, and usually the more expensive one.