Inbreeding is a most distasteful thing that happens in many places that are either extremely isolated, or have really maladjusted religions. It is the practise of having sex with a near blood relative.

Where it's stereotypically practised:

1. In the Southern US states: Texas, Alabama. The ones that are inhabits by either militarists or bigoted racists. The ones where spam sells very well and everyone believes that they have been abducted by aliens¹.
2. In Wales: Sorry to harp on, but when the sheep have been finished with, it's close blood relatives next.
3. In Every Monarchy in History: in those days every monarch had to wed someone of royal birth. In the end, every monarch in Europe was distantly related to every other, even if only by marriage. In ancient Egypt, it was the practise to marry up sibling in order to keep the bloodline pure. They probably started to worry when Emperor X appeared between his/her mother's legs with no chin, criss-crossed teeth and twenty three toes on each hand. Since then, monarchies have developed slightly. Now they marry anyone, as long as they've been to Eton.

Why you should avoid it

There are only two reasons you could possibly have for having sex with a direct blood relative: Money, and Insanity.

The first speaks for itself.

The second needs a little more explaining. There have been many times throughout history and legend when people (or Gods) have had sexual congress for reasons of leaky think tanks. The Roman emperor Caligula, for example, slept with his mother, both his sisters and then ate his son². The ancient Greek Gods thought it perfectly acceptable to marry One's mother³.

Insanity and inbreeding are often directly linked. Inbred families tend to have children with a penchant for wild, insane cackling and a tendency to attempt to summon the dead. These children can also develop nasty physical defects: lacking a chin is a common sign. So are tentacles, teeth that you can abseil down which have so many crossings it looks as though their grandparents⁴ have knitted them and the presented them as a Christmas gift.

To summarise: don't have sex with relatives. It is not a good idea, however much you have had to drink, and however tired the sheep are.