Fitting beautifully into canon does make a fic 100x better for people who are already fans, but it doesn't mean it will be bad or unreadable with the serial numbers filed off. Not for every fic, at least; there are obviously a lot of stories that won't make a lick of sense if you just change the names. But with some others? What may feel "bad" to fans who know the canon may be perfectly enjoyable for people who don't.

Not overly familiar with the One Direction fic, but yeah, I misworded that - although the description ("based on") doesn't seem too clear on whether the novel is entirely new. What makes the story significant for me is that the fic connection is obvious and obviously meant to be public, and people are reacting to it in the same way as to Fifty Shades.