Marco points out the important thing, which is that, once again, we have this undefined term. So we have two choices, either we can define it for purposes of discussion, or we can look at all the myriad things that people use the term for.
Bowing to local pressure here not to make up Jargon, let's look at the uses. I think those have been covered generally by saying it's GM authority to create used when the rules do not constrain him. That takes several sub-forms, listed above. The use is, I agree with Marco, often meant to be negative, because otherwise people don't pay attention to it - GM authority is just an accepted part of RPGs (along with player authority where it exists). So, sure, you can say that any GM use of Authority is Fiat, but that only equates the two.
Which is not to say that people don't use the term in a way that means something non-problematic. Simply that it's a common use that makes it a subset of authority when it's used in this negative fashion.
It seems to me that the important thing to do, as I tried above, is to ignore these definitions, and to look at the underlying phenomena. And that basic split has been caught above - either the GM is using his authority in a way that's acceptable, or he isn't (the proposed Discretion/Fiat split).
If he's using it acceptably, then this is just "what GMs do" or authority, to use the Forge Jargon for it. This is non-problematic, and I don't think it's worth worrying about.
If it's being used unacceptably, now we have something to discuss, because now we can look at the reasons why it's not acceptable. I somewhat agree that it's related to "railroading" under two conditions. First, as I've said previously, that's an ill defined term under most circumstances. But if we define railroading locally and broadly as taking away player ability to add to the game creatively, then this is, indeed, pretty clearly one of the big problems with "Fiat" taken in it's negative connotation. Marco is correctly identifying it in this role above.
But I'd also posit that this is not the only case where negative use of authority can occur. For example, a GM can use his authority to make a player - not the character, but the player - look bad. To use the instantly classice Rhino's on Ice example, the GM might say, "Ah, too bad, the river is frozen solid to the bottom. The rhinos charge you unabated. That was a silly plan." Yes, actually by the Big Model, this means that the player is also being denied the ability to be creative, but that's a subset of the social level problem that's going on in this case.
But I think that the larger problem is when the GM overextends his authority beyond the expected limits. As has been stated above, when the GM voids rules that the players want upheld. I think we can all agree that this is a violation of the social contract that agrees as to what the rules of play are. Technically a form of cheating (if that can be applied to non-competitive situations). This is non-controversial, everyone agrees this is bad.
The "hazy" area here is when the rules explicitly give the GM the authority to change the rules. Seen most typically in the "Golden Rule" stated something like, "If the GM thinks the rules aren't working, discard them, and rule by fiat." Now, in theory, a GM can improve the game by voiding the rules if/when they don't work. The problem with this is that, in fact, the games that have this "meta-rule" (if you will), rarely, if ever, give any but the most vague guidance on using it. Meaning that, as said above as well, players may not have a good idea of when the rules will be voided, or why. Essentially, if the GM does this quite a bit, then the player's understanding of the rules will be that "It's all GM fiat." Even if the rules are followed in, say 80% of situations that seem to demand them, 20% voidance puts enough uncertainty into the picture that players cannot rely on the rules, and will, instead, be trying to determine what the GM will do with their input.
Now, even this can be functional - after all, "Freeform" play is, in fact, all GM authority being used sans guidelines, all the time. But the point is that this is only good if the players want a freeform game, or something akin to it. The trouble is that the game presents all of these rules as though they're good for play, but then the feeling is that they're not really being used.
I'm speaking from experience here, experience with Storyteller System, in fact. Where I, at times, would wonder why I even had a character sheet. In part because of the railroading, but also because the rules would be tossed out or ignored quite frequently. And the Storyteller, when I questioned him about it, would point to the Golden Rule.
There might be some rate at which one can feel that small, judicious uses of the Golden Rule aren't making all of the other rules moot. But for me, and for many others, I suspect, even small amounts of use seem detrimental to the agreement to play by some set of rules. In fact, I prefer playing freeform than to pretending to be using a set of rules, when in fact we're playing by "GM Fiat."
To be clear, what the golden rule does is make all rules like this:
1. Roll to hit (unless the GM thinks that he knows better, and just decides what happens).
2. Roll for damage (unless the GM just decides what happens).
3. Apply damage (unless the GM just decides what happens).
Even if the GM doesn't decide this, if he has unlimited power to do so, and does it even once, it all feels like freeform. The rules cease to be concretely informative of play.
In Universalis, we realized that sometimes people will want to change the rules of a game. I'm not against that, contrary to what it might seem. To that extent, we put in a rule that limits how the player can change the rules in terms of currency, and put in a method for the players to discuss the change, and impose their own wills about it. This throws the decision back to the social level of play, allowing everyone to ratify any changes made to the rules.
This is very different than not changing the rules, but temporarily voiding them whenever one likes. Its the difference between a paricipatory democracy, and a dictatorship. Sure there were laws in Stalinist Russia, but did Stalin have to follow them? OK, that's slanted. But even in the most enlightened dictatorship the rule of law is damaged by having somebody who can void it at will. To say nothing of the potential of power to corrupt.
Yes, RPGs aren't governments, and there are differences in how this applies. But I think that when people are talking about "GM Fiat" as a problem, they are often talking about this particular sort of problem.
That said, I'm sure there are other forms of abuse and misuse of authority that can occur. But I think that these are the most common.
