Should I let fans of my game continue developing a fan game or not?
Solution 1:
Well, you basically have two choices - stop them or let them be. This mechanic isn't that deep and from my experience so far you'll only come across this message once during the game regardless of which option you choose.
If you let your fans continue with their development, then they'll love you for it, you'll get a thank you notice and gain more fans.
If you stop them, then your fans will not be happy and you will lose fans.
The outcomes are pretty much the same as the options to deal with piracy but you won't get money out of it either way.