When you create a new wiki, it's installed with a default license: Creative Commons Attribution License 3.0 Unported. However, this may not suit your needs, so you may have to change the wiki settings to change the "copyright" or "copyleft" used.
Under the default settings, the creators of content retain ownership of their contributions, but agree to release it under your license agreement (e.g. the Creative Commons By-License). Fully copyrighted licenses can of course be used, but we encourage you to use a "free" license in order to promote sharing of information. There are plenty of "free content" licenses that can be used to give your wiki the right level of licensing:
You can release the content into the public domain, which means that there are no controls on how the content is used at all. Any person can choose to copyright or license a derivative work as they see fit.
Creative Commons Licenses
To learn more about each license, visit the Creative Commons website.
Attribution License (By License)
This license is the default installed with each wiki. Essentially, only thing required by this license is that whenever you use content, you must cite the original source. So anyone can use something from your wiki for virtually any reason, so long as they attribute the source or author. They can sell, alter, fold, spindle, or mutilate your content to their heart's content (so long as it doesn't violate artist's moral rights in countries that have them). However, this is also the most free form of license (other than public domain), and provides the maximum utility to your community.
This license is recommended, because it places minimal limits on the use of your wiki's resources, while the attribution aspect promotes your wiki.
You will probably want to use a localized version for the license for your site, such as the United States version.
All of the Creative Commons licenses include Attribution, but other licenses include more more stringent requirements, most of which can be combined.
These licenses require that the creators of derivative works from your also make their work available for other derivative works. In this case, you couldn't upload your wiki's content to some page that claimed exclusive copyright over the content, or reprint it in a fully copyrighted book. However, the section of that book could be released under another ShareAlike license.
Essentially, if anyone uses your free content, it has to remain free content. Of course, this begs the question of what is really free content.
This one is pretty self explanatory. The information on your website may not be used for commercial purposes. There are disadvantages to this, including being unable to share content with Wikipedia and other Wikimedia projects. See someone's opinion on why not to use this non-free license.
Since pretty much the entire point of a wiki is to make derivative works (edits), these licenses are generally not appropriate for wikis.
Using Creative Commons on your wiki
Once you've selected a license (possibly in the Choose a License area), you'll be presented with a few different possible "buttons" to use — this is just a simple snippet of HTML. Copy and paste this text into the "Footer button 1" box in your wiki's General Wiki Settings page. You'll probably want to choose the smaller rectangular button for the sake of conciseness.
You'll also need to update the "Edit agreement text" box to point to the URL of the license you choose, and update (delete what's there right now) the "License text" box to have something along the lines of "Except where otherwise noted, this content is licensed under a (link to license and name of license) license."
GNU Free Documentation License (GFDL)
This license grants the right to copy, redistribute, and make derivatives. It works similarly to the to the Creative Commons Attribution-ShareAlike, except that it requires the those who use the work for commercial purposes (over 100 copies) to make the original document available for free.
This is the license used by most Wikimedia projects, including Wikipedia. If you intend to make use of works from these wikis, selecting the GFDL is the easiest way to ensure you can share content with them. At the same time, wikis that use more "liberal" licenses, such as the Creative Commons-By license, can be used in GFDL projects, but you won't be able to use their material in your wiki.
GNU General Public License (GPL)
This license is intended for software, not for the content of a wiki, so it should generally not be used. (Same goes for the LGPL.) However, the Wiki Spot software (Sycamore) is licensed under the GPL.
Other concerns to keep in mind
Someone write this — no time, gotta go:
Choose something that can work well with other licenses.
Type of content might dictate the type of license.
Editors of your wiki may be more likely to want to contribute if their work is released under a free content license. See the Free Content Definition.
See also: Wiki Copyright on Meatball Wiki