AU denotes a retelling of the original source material with an alternation of a major part of the story, like a new genre setting, or a different direction of the original plot line, or a mashup with another fandom, or an OOC version of original characters. Examples include slash / femslash fan fiction, fairy tale retellings, Hardy Boys / Nancy Drew crossover books, The New 52 comics, the 2016 Ghostbusters reboot, Batman movie remakes, Superman movie remakes, Alice movie remakes, etc.
But not all fan fiction is like that. Fan fiction can also have additional episodes, story arcs, and new characters, stuff that can conceivably be left out of the original canon but still remain part of its extended universe. Examples include Star Wars' Expanded Universe, the Marvel Cinematic Universe, the DC Extended Universe, etc.