Canonicalization - URL preferences for Google

Google engineer, Matt Cutts, discussed about URL canonicalization in his post long time back. He explained about how URL canonicalization is helpful for Google to pick a preferred URL based on keyword research.

So what is URL canonicalization?
URL canonicalization is one of the Google technique that allows you to publicly specify your preferred version of a URL. A web server could return completely different content for different URLs. When Google “canonicalizes” a url, it pick the url that seems like the best representative from that set. Setting a Canonical URL will help Google to decide which URL to be canonicalized for aparticular set of pages. like if you set "www.canonicalizedurl.com" then Google will canonicalize this URL among "www.canonicalizedurl.com" ,"canonicalizedurl.com" , "www.canonicalizedurl.com/index.html", "www.canonicalizedurl.com/home.aspx", "www.canonicalizedurl.com/default.php"

How Canonical URLs works?
It helps Google to find the most priority page when calculating the most relevant page to display in search results.

Even Google using Canonical URLs
see here http://www.google.com/trends

How to Add Canonical URL in your site?
Use the following code inside the section to set preferred URL for your website pages:
link rel="canonical" href="http://www.example.com/product.php?item=swedish-fish"

You can also use a relative path to specify the canonical, such as ?
According to Google "relative paths are recognized as expected with the tag. Also, if you include a link in your document, relative paths will resolve according to the base URL."

Google Tips and Advices for Canonical URL
http://googlewebmastercentral.blogspot.com/2009/02/specify-your-canonical.html

The Followers
1)Should we use the Canonical URL with http:// or without it. Google is using it without http:// in Google Trends while they have advised to use it with http:// ... Technically both the URLs are different from canonical URL perspectives and are considered seperately.

2)It show some 404 pages if you apply it without http://
It generate 404 pages that are nowhere in the site (e.g.)
http://www.example.com/Main/www.example.com/Main/
http://www.example.com/Main/ABC/www.example.com/Main/ABC/

It seems such pages are generating with the logic of URL in address bar+canonical URL. In the example http://www.example.com/Main/ is browsed page URL and www.example.com/Main/ is canonical URL in browsed page.

Probably this could be resolved using http:// with canonical URL.

Please let me know your feedback on this.

Thanks. Deepak Rajput !!