I'd say 'oil canning' is when the bottom of a kayak wears out, becomes flat (that was for displaced hulls), or is concaved inward, towards the seat, rather than convex, outwards towards the river bottom. It means the hull, bottom of the kayak, has been worn down (scraped over rocks, etc), and the plastic is wore out. It does not have it's original shape.
You won't get the best performance from an old boat that has oil canning, it may not track as well, in the water. But you can still surf it. That is how I'd describe it. anyone else?