Works of Fantasy feature events, settings, or characters which are outside the generally accepted realm of possibility, frequently using magic and other supernatural phenomena as a primary theme or plot element. Although Fantasy is frequently grouped with Science Fiction and Horror, the genre is generally distinguished from the other two by its lack of overtly scientific or macabre content. Another important characteristic of the genre is its frequent connections to mythology and popular folklore.

Many children's literature textbooks distinguish between two major types of fantasy.

Low Fantasy features non-rational events and characters in a world or environment which is otherwise common. For example, Stephenie Meyer's Twilight series features vampires and werewolves, but is set almost entirely within a realistic town.

High Fantasy, in contrast, features settings which are completely fictional, transporting readers to an alternative world or reality. For example, C.S. Lewis's Narnia series is set in the fictional land of Narnia. For the most part, works of high fantasy require the reader to develop a greater "suspension of disbelief" than most works of low fantasy.

Types of fantasy include:
- Traditional and Modern Fairytales
- Quest Stories
- Stories featuring personified toys, animals, and objects
- Stories featuring miniature worlds and people

Is the work's fictional world internally consistent? Does the author succeed in suspending the reader's disbelief?

Are the work's characters and settings vivid, imaginative, and original?