Metafiction is any kind of storytelling where the creator is actively trying to make the audience think about the fact that it is experiencing a fictional account. This might be handled through the use of many different narrative devices, including cases where the artist directly speaks to his audience or some cases where the creator becomes a character in the adventure and talks about the process of writing the story. The reasons for metafiction vary a lot, with some authors doing it to provoke a particular reaction in the reader, while others do it specifically to comment on the process of creating fiction. Metafiction is actually also common in film and theater, but most people use the term to describe techniques employed by authors of novels and short stories.
There are many different ways that meta techniques can be employed in fictional narratives, and it can either be subtle or very obvious. For example, some authors will gradually make the audience aware of a certain slant in the voice of the narrator in a third-person story, and over time, the narrator might actually start to feel like a character. Eventually, the author in these stories may sometimes reveal his or her own identity and comment directly about things that are happening in the story. Another common method is for the author to create a character patterned after himself, or actually create a character with the same name, and have the character speak about the process of creating the story the reader is experiencing. A more subtle example would be for the author to address the reader directly about the process of writing a certain passage or section before quickly slipping back into normal narrative.
Storytellers have a lot of different reasons for wanting to explore metafiction. Some of them are simply interested in making the reader step away from the story a little to think critically about everything he's been told. There are some authors that feel the process of creating believable fiction might be too emotional in a way that could dull a reader's senses and stop the person from seeing important intellectual points. Others create metafiction as a way to explore the actual process of creation in a potentially fun and revealing way while simultaneously telling a story.
Certain fans really dislike any kind of metafiction. Some of them feel it is somewhat pretentious, and they may feel like the author is insulting them by purposefully taking them out of their suspension of disbelief. Others simply find that it disrupts the flow of a story and makes fiction less enjoyable. On the other end of the spectrum, those who like metafiction are often very fond of it, and may actively seek out works where metafictional techniques are employed.