A fan artist (or fanartist — in line with fanwriter and faneditor) is both a fan and an artist. Fanartists are part of the fannish gift economy and do their art for the benefit of other fans without more than nominal payment. (The key point is whether the payment is large enough to form a significant part of the motivation for creating the art. A beer or copies of a fanzine or $10 is usually not enough. And undying friendship or massive egoboo may have value beyond mere money, but it's not a financial motivation.)
The subject of the art can be anything at all, as long as its stfnal or fannish. Most fan art is not illustration as such. Although some faneds do ask for them, pieces illustrating an article or a specific character are a distinct minority of fan art. Cartoons are popular, as are stfnal themes. Until the advent of inexpensive color printing and online art, most fan artists worked in black and white, doing the line drawings that reproduced best for mimeography, particularly in the days of hand stencilling.
"Fan artist" is not the opposite of "professional artist" and they do not form disjoint sets. Nor is fan art merely amateurish pro art. A professional artist who contributes art to a fanzine or convention program book without being paid has done fan art. (This is more common than most people think.) People can simultaneously be both a major fan artist and a major pro artist -- Jack Gaughan is the classic example.
Likewise, if an artist who is well-known for contributing fan art to fanzines does a piece of art in the same style and with the same subject matter and sells it for nontrivial money, then that piece of art is professional.
Note also that while a pro may do fan art, that does not necessarily make that pro a fan artist. A fan artist does fan art on a regular basis and, time permitting, will generally respond positively to a reasonable request for art.
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