Writer's Fallout Shelter

A lot of times I'll make references or pull ideas from works of literature and myth. I once based a story around the myth of Echo and Narcissus. A friend of mine has a city named Valhall, after the Norse Valhalla. It's fun putting little references in like that because it causes well-read individuals to smirk. Almost a literary Where's Waldo.

If, however, you're talking about writing a spin-off from an already standing piece of fiction, then it's fanfiction. Fanfiction is a wonderful way to practice and learn how to make references. Sometimes known authors can get away with it, as I think Neil Gaiman wrote something like that. But I'm not sure how much it's frowned upon for known authors. You have to make a name for yourself before you attempt anything like that for a profit.

And then there are authors who collaborate a bit, writing a scene that takes place in the background of another story, or using another author's character as a cameo. Usually the authors are great friends and find it amusing, and free publicity. My friends and I plan on doing that when we become famous, or at least well-known. ;)

I probably went on a couple tangents there, but I hope that answers your question.