Artistic licence or license (US), also known as dramatic license/licence, is a colloquial term used to denote the liberties an artist may take in the name of art — for example, if an artist decided it was more artistically "correct" to portray St. Pauls Cathedral next to the Houses of Parliament in a scene of London, even though in reality they are not close together, or if he or she decided to depict a dinosaur chasing a neanderthal (even though the two never coexisted), that would be artistic license.
In summary, artistic license is:
Entirely at the artist's discretion
To be tolerated by the viewer
Neither "good" nor "bad"
Useful for filling in gaps, whether they be factual, compositional, historical or otherwise
Used consciously or unconsciously, intentionally or unintentionally or in tandem
For Artistic License or Licence, as a type of licence used for some kinds of free software, see Artistic License. This name is a pun on the original usage.