What is a Derivative?
A derivative is a modified version of an author's original book that is personalized for an individual or group. Any derivatives created will show an attribution to the original work and will be marked as "Modified by (user name)" while the original owner retains ownership & royalties.
Allowing derivatives creates selling opportunities since it will enable others to create customized versions of an author's original book that can be shared. The customization is limited to the following actions: users can change the order of chapters, hide unnecessary chapters, and add in new notes and multimedia (such as audio, video, pictures, and more). Users cannot make changes to the authors text.
Please look at "How do I customize a book?" for a step-by-step tutorial.