After the code of a Dev release becomes stable enough throughout a series of releases, it then graduates to become the next Beta.
4. Where the Canary Build fits in
The "Canary Build" is usually the Dev release or a version of the Chrome browser code that may be even more recent than the Dev.
As Mark Larson, one of the developers of the Chrome team, posted in an official message board for discussing the development of Chrome: "The canary usually updates more frequently than the Dev channel (higher risk of bustage), and we're working on making it update as often as we have successful nightly builds."
Once installed, the Canary Build will automatically update itself whenever the latest version of the Chrome browser code is released. The code downloads and installs in the background, and when you restart the browser, the newest version will load and run.
6. Canary Build won't default
However, you're not allowed to set the Canary Build to run as your computer's default Web browser. Apparently, the Chrome development team wants to emphasize that the Canary Build is not stable enough for you to count on for your regular browsing needs.
Of course, such reliability is always subject to change whenever the next version of the code is released and Canary updates itself with it.
7. Plays nice with its more mature siblings
Although you cannot set it to be your default Web browser, the Canary Build can be installed alongside another version of Chrome, whether it is the Stable, Beta or Dev. Previously, it wasn't possible to easily install two different versions of Chrome on the same computer (although this could be managed by manually installing files and performing a few tweaks).
Whichever is the latest version of Chrome will overwrite the older version already on your computer. For example, since every Dev version is more recent than a Beta, the Dev will overwrite the Beta upon installation. And either will overwrite a Stable version installed on your computer.
Such is not the case when you install the Canary Build. It installs and uses its own directories and files that are separate from whichever other version of Chrome that may already be installed on your computer. The Canary Build will not overwrite your other installation of Chrome.
8. Extensions on the Canary Build