Well, there's three ways to consider it: (1) Is it illegal? (2) Is it morally wrong? (3) Is it practically inadvisable?
Is it illegal?
Under United States law, yes, it's copyright infringement. If you wrote a book set in the Star Wars Universe and published it on Amazon, you could be sued and the court would be expected to side with Disney. You could try to argue fair use (or that it is sufficiently transformative), but in this situation the argument isn't likely to hold in court.
Is it morally wrong?
When considering morality, I tend to pretend laws don't exist and address how I feel about things.
Disney is a multi-million dollar company and I tend to hold less sympathy for them. For instance, how do people feel about pharmaceutical companies jacking up prices on essential medications because they own the patent that allows them to be the exclusive manufacturer (monopoly) of a drug? In both cases, we are talking about intellectual property.
I personally tend to believe that copyright/patents defend the interests of individual owners at the expense of the public good.
For instance, generic medications are good for the public. We want patents on important medications to expire because patents are a legal monopoly, and we want knockoff products to be brought to market as soon as possible. Likewise, open source code is good for the public and stimulates a community of programmers and software developers (i.e. unix systems). I tend to believe that derivative things like AMVs are art and that allowing these things facilitates the creation of more art (in a public good sense). It would be very painful if the entire utaite/music cover community was slammed with copyright claims, and to some extent I feel like it's better for artists to accept that producing art means that there will be derivatives that steal your idea without necessarily giving back a cent. In many circumstances, the Internet wouldn't be the way it was if users were magically prevented from uploading images that they don't own the copyright for to reddit/pinterest/tumblr (note: this is also illegal), and I think we need to appreciate that the Internet is the Internet that we know and love because all of these things.
There are good things and bad things about copyright.
I'm sympathetic to musicians, artists, and authors who are struggling to eat food because of widespread copyright infringement. It is necessary to defend their interests.
However, when a copyright expires (14 years for patents and 70 years for published work), generally speaking this is good for the public.
Is it practically inadvisable?
It depends on the amount of money you made (or lost for the original owner). It costs money for the plaintiff to bring you to court, and generally speaking they won't sue you unless they believe they can gain more money from suing you than leaving you alone.
For instance, if you made $10 off of Star Wars, it will cost Disney more money to bring you to court than any amount of money they can extract from you. If you made 10 million dollars off of Disney intellectual property, it's probably likely that Disney might be interested in that cash.
Note that these considerations also apply for damages. For instance, if you distribute a music video for free, the music producer could argue that you caused them to lose money (since users could listen to their song on your music video without paying), and they could calculate the projected damages/losses based on their regular licensing/royalty rates and bring that number to court.
If your fanfiction / copyright infringement is based off of an anonymous free work you found on ScribbleHub, courts are unlikely to care if there is no money involved. There is actually nothing to sue and no case, and it's not very compelling for the original artist to say "my pride was hurt" but I didn't lose any money.
In other words, the smaller things get, the less that the legal system tends to care.
Content platforms tend to respond liberally to DMCA complaints though, so they often do remove on request anyway.
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