Since there's a lot of aspiring and newly started roleplayers out there, I thought it'd be useful if we could get a list of common concepts and terms in RP world going on, both universal and AO specific. Here's some I remember off the top of my head:
Canon - The concept, the setting of the story. In this case, the Anarchy Online continuity.
Metagaming - The act of using OOC knowledge in an IC situation. This is often a bad thing to do, but sometimes it can be acceptable, depending on the situation and characters involved. For example, if your character has very little knowledge or relation to my character, it's highly unlikely he would know Mirura likes to drink Founding Glacier with vodka, even if it would say so in her AOU profile. Good metagaming can happen, for example, in the form of a rumor - you might be tipped off OOC that you might have heard something IC.
Powerplaying - Also known as godmoding, generally considered the most heinous of crimes in RP anywhere, unless the context specifically allows for it. Powerplaying means imposing actions on another character without their consent, or acting in an overpowered way, with an obvious unwarranted advantage to others in the situation. Most commonly happening in battle situations, forms of godmoding include autohitting, moving a character without the other player's consent, inhuman strength or fighting skills, dodging all attacks or outright invincibility. In AO's context, it's also considered powerplaying to use nanos that overpower the character excessively. Common sense and asking yourself "could this happen in a real situation?" is a good way to avoid godmoding. This brings us to..
Permadeath - As AO has the wonder of Insurance, death isn't as much an issue as it is in most other RP settings. However, in rare circumstances, permanent death may happen at the agreement of everyone involved and at the consent of the player whose character is about to die. Permadying characters are usually disposable plot device alts, as nobody wants to have their 220 cut off. In such a case though, it's possible to continue playing the character OOC, simply going inactive in RP and informing everyone involved IC with him/her to consider him dead.
Retcon - "Retroactive Continuity", where players might agree to "erase" some events from the storyline. This could be due to an inconsistency in the plot, a scene that went wrong or a variety of other reasons. Happens quite rarely in practice.
Mary-sue / Gary-Stu - Originating from several different fanfiction fandoms, Mary Sue is a type of stereotypical female character. She is often an idealized version of the writer's (or player's) self placed into the canon and is commonly very accomplished for no proper reason. Mary Sue is usually a young woman and the embodiment of many common clichés, as she might have supernatural powers, very unusual hair or eyes, a particularly tragic past and/or remarkable beauty. Gary-Stu is the male counterpart of Mary-Sue (commonly muscled, handsome, strong and successful) and both types are considered a form of wish-fullfillment to the author or player. As a downside to their apparent perfection, these characters often lack real depth and fail to be genuinely humanlike and sympathetic. Mary-Sue characters are generally looked down upon. They appear most commonly in MUDs and other less graphically advanced games that rely on writing long walls of text just for emotes (whereas very little physical description is necessary in AO due to customisable character models) but the concept is still there - though I'm pleased to say I haven't encountered any 'real' Mary-Sues in AO as of yet.
Take this frighteningly accurate test to see whether your character is secretly a Sue or Stu!
IC/OOC Separation - The more in-depth and serious roleplaying gets, the more important this becomes. It's considered good form to not mix IC relations and events with OOC, as it isn't you *really* having an argument with the other person, nor are you *really* in a romantic relationship with them (though if you are and you're just roleplaying it too, godspeed to you). It's vital to recognize where the line goes, and to not harbor hatred towards the player of a character if the character does something bad to you. You are not your character, you are not a laser pistol swinging space cowboy, you're a nerd sitting at your computer playing a video game. Getting too absorbed into your character is not good.
Vaporgaming - Advancing a RP plot by OOC agreement without actually playing it out. This can be done when a particular part is hard to actually RP (such as Mirura breaking into someone's apartment - I gave the victim an OOC description of what had happened in his home and what was missing so he could bring it into IC context).
Roleplay cliché - As freeforming has been around since the early 90's, a lot of clichéd character archetypes have formed over time. (broken url removed) is an interesting list I found that states pretty much each and every stereotype there has been. It applies quite universally to all RP genres. While stereotypes aren't necessarily bad, clichéd characters are usually very predictable and end up being boring to roleplay with, and people can even start making excuses to not play with them. Even if the basis of your character is influenced by a stereotype, try to make it more personal and interesting.
(note: particularly the 'Mysterious Stranger' thing has been overdone WAY too much, especially with male characters. don't be another one.)
How to battle without godmoding - an example
Oh no, a wall of text!
The key here is giving your counterpart(s) room for a response. Instead of "Mir shoots at Chaupin in the head at point blank and blows his brains all over the ground", which is dirty autohitting, I would post as "Mir holds her submachine gun out at Chaupin, pulling the trigger." This gives my opponent space to react and adds a surprise element to the outcome - he could notice a 1 million credit chip on the ground and kneel down to pick it up, thus dodging my shot. Or it might hit him in the chest or shoulder or the arm, depending on how much he is moving in the situation and how much the other player is willing to have their character crippled. He might be wearing tank armor, which could shield him from the bullets altoghether, after which he could attempt to disarm me by trying to land a kickass martial arts strike on the arm by which I am holding the gun.
Now, since Mir's right arm is cybernetic, but her left one is still intact and natural, the effect of his strike would depend a lot on which one he'd choose to hit - the left arm would feel pain as normal, and it could result in fractured bones, but the right arm could, depending on the strength used in the strike and the spot he'd land it on, either get away with a little scratch and a brief flare-up in the pain sensors, or it could get disabled altogether.
A situation such as this requires both sides of the fight to be decent roleplayers with a healthy dose of common sense and respect for their opponent. When it boils down to it, fighting in freeform is give and take, and if there's a disagreement, a simple dice roll with a bot solves most problems. A battle scene demands constant estimation of each character's strengths, weaknesses, position, weapons, how heavy armor they are wearing if any at all, and with Fixers there's the extra surprise element of them having the ability to Grid out of a compromising situations.
Some handle this (e.g. Omni-Pol) by using a conveniently made-up anti-grid field generator, but such a device is feasible in AO's canon and it's generally accepted as a decent way to counter problems in dealing with those slippery little hackers. It's worth noting that devices like this are usually only possessed by law enforcement and are probably illegal to own by ordinary citizens.