What draws the line between fiction and fanfiction?
For example, if someone wrote a fanfiction, but then it progressed into something more than a fanfic, but it still kept base things from the series, would it still be a fanfic?
(I also apologise in advance if this isn't the place to ask such questions.)
I would think that you are entering the realm of fan fiction (and plagiarism for that matter) the moment you use an identifiable setting, character, etc. that has already been created by someone else.
If you’re writing an original space opera, for example, and you decide to feature a spherical planet-destroying space station, that’s fine—just don’t use the blueprints and certainly not the name of George Lucas’s “Death Star”. You might instead decide to name yours a “Lethal Star”, but if it essentially the same thing, any reader worth their salt will toss your book across the room on the instant if they haven’t already.
This leads me to the use of genre tropes. If you want to avoid the label of “fan fiction” then don’t use any pre-existing names, settings, etc. In a fantasy novel you could describe a world with elves and orcs based loosely on J.R.R. Tolkien’s “Middle Earth” as long as you don’t call your world Middle Earth and have “the Shire”, a supporting character named “Samwise Gamgee”, essentially the same plot, and so on. Done wrong though, as you will earn yourself a mention in a Wikipedia entry such as the following (found in the Lord of the Rings trilogy entry): “The opus has spawned many imitators, such as The Sword of Shannara, which Lin Carter called ‘the single most cold-blooded, complete rip-off of another book that I have ever read.’”
I don’t know what type of fiction you are writing, but I would think that most writers aim to create their own unique setting based on the tropes of their genre (especially fantasy and science fiction writers). If you’re aiming to sell your writing or have it represented, then you need to be very careful about any potential legal repercussions if you’re blatantly taking the ideas of others. Could any part of your work be seen as plagiarism?
It seems odd that a "fanfic could progress into 'something more'" as you mentioned. Does this mean that a fanfic would become an original work? I would expect the opposite to happen. For it to become an original work, it would need to shed every identifiable element invited by the original creator.