[P]arafanfiction…refers to a particular subset of parafictional art that claims to be fanfiction of, or some other record of, an external media object that does not actually exist.
The most notable examples of this are the Homestuck Anime and Squiddles, both of which are spinoffs of the actual Homestuck hypercomic. The idea with those projects is to fabricate an entire alternate reality where Homestuck is an anime and the in-comic show Squiddles actually exists. The fans participating in these projects create objects ostensibly taken directly from the shows in question—screencaps, pictures of old VHS tapes, GameBoy Advance cartridges, gif edits, and so on and so forth—in order to sell the idea that these shows actually exist.
Parafanfiction and Oppositional Fandom by Sam Keeper