When you start up the Minecraft client, you can tell it what version to use.
This needs to match the version of Canary you downloaded. As I write this
the latest version of the Canary server is 1.7.10, but the client that you just
installed defaults to Minecraft 1.8, which CanaryMod doesn't support. That
won't work. You'll need to tell the Minecraft client to use the correct version.
In the Minecraft startup program, click on Edit Profile in the lower left.
Look for the Use Version setting in the dialog box that pops up. Change the
option to use the current version of your Minecraft server, and click Save
By the time you read this, the version numbers might be completely different.
Whatever the versions are, you'll need to check the version in the client and
make sure it matches the server's version. Go ahead and click the Play button.