However, I could be wrong. Care to explain?
He's referring to a single, unspecific line in Yesterday's Enterprise. Alternate-Yar explains to the Enterprise-C's helmsman that the war with the Klingons has been going on for twenty years and he replies that "we were negotiating a peace treaty with the Klingons when I left."
... of course, they were negotiating a peace treaty with the Klingons without having fought a war in Star Trek VI, too. I bring this up not only as an obvious example of why it's wrong to assume that there's a secret space war going on twenty years before Next Generation, but to point out what the purpose of the line originally was. You must remember that Star Trek VI hadn't been written in 1989... all they knew when putting together Yesterday's Enterprise was that at some point between the original series and the Next Generation the Klingons and the Federation go from being cold warriors to being space friends. This is an initial attempt to explain what those events were... which we retcon out of existance four years later when Star Trek VI attaches them to the adventures of Kirk and company (oh, we say, it must be *another* peace treaty of some sort...).
You would think that the folly of creating this retcon to explain a later story in the first place and then adding to it even further (there was a terrible war! ships were designed to fight it!) to the point of contradicting both direct quotes from Deep Space Nine and the entire nature of the series in the first place would be self evident... but who knows how people think.
People on the internet need to understand the difference between the "C" word and simply an offically licensed product.
I disagree on this point. I don't think people on the internet should know anything at all - insert your own joke here. A canon is a tool for writers: they tell the guy writing a new script what he should and should not take into account. It would be absolutely impossible for a professional writer (who is not by nature a Star Trek fan - but I defy even Star Trek fans to have such a level of knowledge) to take into account a thousand comic books and 300 novels and so forth every time he writes a line of script. It's just impossible - the idea that there's a essential core of material that he must be familiar with makes his job reasonable (in Paramount's reckoning, for their writers that core is all filmed material).
Continuity and the idea of a "canon" are and should have remained behind the scenes element, distinct and separate. They should serve only the needs of an episode writer (and in practice, with 900+ hours of filmed material, they no longer do this either) and not the unsubstantial opinions of a fan.
Throwing it out to the fans is forcing the apple down Adam's throat. Instead of respecting and enjoying Star Trek as Star Trek (or insert your favorite series here), they fighter over what is and isn't *really* Star Trek. I mean -- what the hell? Why do people watch/read/etc. Star Trek in the first place? Is it because they enjoy the stories, characters, etc... or because they feel it's some kind of important future history that they're under some kind of painful responsibility to be exactly familiar with? You may not believe the latter and respect the former. If the second terrible read is the case -- which somehow it seems very often to be -- why put yourself through any of this in the first place?
How many times have you seen someone say 'oh, I don't read/won't discuss/won't consider the novels (or comics, or the cartoon)... they're not *canon*'. It's stupid not just for the horrible abuse of language -- it doesn't make sense in concept. They're applying an unnatural standard that should never even be understood in the first place, all in order to destroy something that otherwise exists only for their enjoyment.
A Star Trek novel (or comic book or cartoon) holds itself to the same standard as the TV episodes do. If I pick up whatever this months book is, it will be absolutely 'in continuity' with all the previous novels *and* the existing studio 'canon' (in so far as such a thing is possible, and it is impossible in every form including television episodes). If our generation of horrible cynical jerks absolutely needs to quantify everything in terms of how real a fictional story is, let them pick that as their continuity -- the obscure media tie in that works itself to fit with everything and in so doing gives them another story to experience.