Difference between 301 redirection and rel=canonical ?

[GuitarPrince]

A 301 redirect is designed to help users and search engines find pieces of content that have moved to a new URL. Adding a 301 redirect means that the content of the page has permanently moved somewhere else.
The Rel=Canonical Tag - This is a relatively new tool for SEOs to use, it was first announced back in February 2009. Wow was it really that long ago?!
As I mentioned above, we get a lot of Q&A around the canonical tag and I can see why. We've had some horror stories of people putting the canonical tag on all their pages pointing to their homepage (like Dr Pete did) and Google aggressively took notice of it and de-indexed most of the site.This is surprising as Google say that they may take notice of the tag but do not promise. However experience has shown that they take notice of it most of the time - sometimes despite pages not being duplicates which was the whole point of the tag!