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I tend to use "knockoff" to describe something that takes the style and design of a good, but does not label or distinguish itself as being the original. In this sense, knockoffs are legal. Replicas, however, are illegal. As long as there is no trademark infringement, you're in the clear. What's trademark infringement? According to Webster's, a trademark is "a distinguishing characteristic or feature firmly associated with a person or thing". So if you buy a Gucci bag from a vendor and it actually says "Gucci" on it or just the signature "G", that's infringement, EVEN IF it was sold as a fake without deception. If the bag only resembles an existing Gucci bag in style, that's okay. However, if the trademark is "confusingly similar" to that of the original product (think "Kade Spade" instead of "Kate Spade"), you can still get in trouble. Here's an awesome resource for more details: http://www.narts.org/shopping/fakes.
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Are knockoffs and replicas illegal?
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