In order to better understand and talk about fiction writing, it is important to have a firm grasp of the basic terms that are used in reference to fiction writing. Here is a list that I have appropriated from Metro: Journeys in Writing Creatively and Understanding Fiction. Some terms may be more familiar than others. Whatever the case, study them, learn them, love them.
Action: In the context of fiction, the word refers to the occurrences in a story. Action may include any incident represented by the words in a story and need not concern only adventurous or violent behavior. Therefore, "action" in this context is not the same as the "action" in, for example, an "action film."
Allusion: A reference that a work of literature or another kind of written text makes to other specific characters, persons, things, texts, events, and so on. Such a reference assumes a shared body of knowledge between writer and reader. For example, if a character in a story says, "I shall return," the author may be hoping readers will recall that General Doublas McArthur said those exact words during World War II. And an author who writes, "The world was all before them," is making an allusion to John Milton's Paradise Lost, which contains that sentence. The word should not be confused with illusion.
Antagonist: With regard to literature, the term refers to a character who is a source of trouble, destruction, or evil and who is usually in conflict with the protagonist or main character of a narrative.
Canon: In the context of writing, literature, and criticism, a "canon" is an agreed-upon list of superior works or body of literature; however, agreement about the list of the works is often hard to achieve, fragile, or illusory.
Cliché: An overused, unoriginal expression, idea, phrase or theme. "Jumping from the frying pan into the fire" is an unoriginal expression, used countless times, to suggest a circumstance in which someone escapes one bad situation only to enter another one.
Close Reading: An engaged analysis and interpretation of a literary text that moves beyond a simple summary of the ideas or actions expressed in the work. A close reading often focuses on the specific words or figurative language used in a passage.
Conflict: Drama and fiction are often said to depend on the conflict they represent. Such conflict might include a test of wills between characters, a collision in one character's life between illusion and reality, betrayal, economic or social friction between characters, violence or the threat of violence, and so on.
Connotation: The values, qualities, associations, and shades of meaning that a word acquires in contextual usage over time.
Dénouement: French term for resolution that refers to the way the specific plot of a story sorts out the conflict and action represented in the work. For example, the conflict and action of Herman Melville's novel, Moby Dick, concerns a sea captain's obsessive desire to kill the white whale. The plot "resolves" the conflict in part by having Ahab destroyed by the whale.
Diction: The choice of words in a narrative.
Diegesis: The world of a story.
Doppelgänger: German word that may be roughly translated as "the double." In the context of literature, it refers to representations of such "doubles" as split personalities, twins that share especially powerful psychic connections, or relationships that are figuratively twin-like. One of the most famous narratives of "the double" is Robert Louis Stevenson's Strange Case of Dr. Jekyll and Mr. Hyde. In this novella, the extreme shift in personality is ostensibly caused by chemicals, but the narrative also contains potential symbolic features that comment on inner conflicts and psychic struggles in general.
Epiphany: In connection with fiction, the word refers to a moment in a narrative when a character experiences realization so intense that it is potentially life-changing. James Joyce is often credited with borrowing "ephiphany" from its religious context and applying it to fiction, especially short fiction, and especially short fiction that concerned "the interior life"—psychological struggles, emotional upheaval, massive disillusionment.
Flashback: This occurs when a narrative moves or "jumps" back to an earlier time, meaning that the plot proceeds out of chronological order, so that a story may begin with a scene in the "present time" of the narrative, jump back to an earlier time, then return to the "present time" with which the story began.
Genre: A synonym for "type" or "kind." In the context of literature, the word refers to different categories of literature. For example, the "novel" is a genre, and "drama" is another. Such categories can be broken down even further into "subgenres." For example, within the category of "novel" is the subgenre "mystery novel." The terminology can get confused and confusing, however, because some critics refer to popular forms of the novel, such as science fiction and mystery novels, as "genre fiction" or "category fiction."
Hyperbole: A figure of speech using exaggeration for emphasis or effect.
Intertextuality: The word refers broadly to the ways in which a story might refer to, assimilate, or echo another story.
Irony: A stance toward the world in language in which what is spoken or written is different (by intention or ignorance) from what the speaker or writer means. For example, one might be angry with a friend but instead of saying, "I'm angry," ones says, "Thanks a lot." One would likely say the words sarcastically, sarcasm being one form of irony. In literature, a situation represented in a narrative can be ironic. For example, a character may believe he or she is exacting revenge on another character, but the vengeful act may be only self-destructive. In such a case, the narrative represents a distance between intention and consequence.
Metafiction: A story about a story.
Metanarrative: A story that draws attention to the mechanisms of telling stories.
Metaphor: A figure of speech; a comparison of one thing to another. If the words "like" or "as" are used to complete the comparison, the writer has produced a different figure of speech, the simile.
Narrator: With regard to stories and novels, the word refers to the effect of a "speaking" or telling voice through which the story appears to come to the reader. For example, John Updike is the author of the short story, "A & P," but the narrator is Sammy; that is, Updike created the effect of one "Sammy" telling a story in the first person ("I").
Oxymoron: A figure of speech that joins or yokes together two seemingly contradictory or opposite things, often used ironically ("jumbo shrimp," for instance, or "cafeteria cuisine").
Parable: A short, relatively simple narrative designed to instruct or "teach a lesson."
Plot: The specific arrangement of scenes, represented events, or increments of action that occur in a short story, a novel, or a play. One hundred writers would come up with one hundred different plots about the story of "a woman who fallis in love with a vampire"—hence the difference betwen "plot" and "story."
Point of View: With regard to fiction, there are at least two basic ways to think about point of view:  Whose story is it?  Who tells the story? In Updike's "A & P," Sammy is the chief character; the story is "his," chiefly because he is in the middle of the action and bears the brunt of the consequencs resulting from what happens. He is also the teller of the story, the narrator, figuratively "speaking" in the first person ("I"). If Updike had chosen to use a third-person narrator, the story would still "belong" to Sammy, but Sammy would no longer be the "teller," even if the teller were to represent Sammy's thoughts.
Protagonist: In the context of literature, the word traditionally refers to the main character of a narrative. Sometimes the words "hero" or "heroine" are used similarly, but protagonists need not be heroic; they need not be brave, and they may be ordinary and flawed.
Representation: The act of using a word, image or pictorial sign to stand for something else. Representations have a shaping role in society insofar as they communicate perceptions, influence opinions, and build consensus, as well as determine attitudes and beliefs.
Stock Character: A character that fills a predictable role that is conventional to certain kinds of narratives. Westerns, for example, predictably offer readers and viewers a hero, a bad guy, a kind-hearted woman who either gambles or works in a saloon, and stereotypes of Native Americans.
Style: The distinctive manner of expression an author uses in a literary text.
Suspense: In the context of fiction and other narratives, the word refers to an effect of uncertainty created by the story. A classic example of suspense occurs in mystery or crime fiction when, in the story, someone has been murdered but the narrative has not yet revealed the murderer. The identity of the murderer is held in suspense. Virtually all narratives depend on some kind of suspense or delay.
Symbol: A concrete image, word, or thing that refers to an abstract idea or condition. For instance, a wedding ring is a symbol of marriage.
Syntax: The specific arrangement of words, especially in a sentence, clause, or phrase. The syntax of the sentence, "I like you very much," is unsurprising and conventional. "Very much I like you," although it contains precisely the same words, is jarring because we are not used to seeing these words in this relationship to one another.
Theme: The central idea or ideas suggested by a literary work.
Tone: A literary concept analogous to the tone of voice in spoken language.