Fantasy is a confusing word because it can mean so many things. Fantasies are about wish fulfillment--it starts with someone thinking, "wouldn't it be great if..." Fantasies can be realistic, adventurous, erotic, vindictive, etc. The fantasy genre as we know it today typically consists of magic, monsters, warriors, and fictional worlds.
There are many precursors in the fantasy genre, such as epic poetry from Greece and Rome, Beowulf, The Legend of King Arthur, Arabian Nights, and various medieval romances.
What separates the modern genre from these older works is that we know exactly who wrote them, and we know they're merely fiction. Older stories mixed historical fact with fiction, claiming the stories were true.
This fantasy genre became popular in the 20th century, thanks to writers like C.S. Lewis and J.R.R. Tolkein, and also thanks to new magazines like Weird Tales.
Other famous fantasy works include:
The Chronicles of Prydain by Lloyd Alexander, a series of books including The Black Cauldron.
The Island of the Mighty by Evangeline Walton.
The Sword of Shannara series by Terry Brooks, the first to reach no. 1 on the New York Time's Bestseller's List.
The Game of Thrones by George R. R. Martin.
Fantasy writers often build fictional worlds, complete with continents, oceans, nations, and fantastic monsters and creatures. The first writer to engage in world building was William Morris, with The Wood Beyond the World, in 1894.
Language is also important in fantasy stories. Characters often use archaic dialects to give the story a sense of time and place, different from our own.
There are several ways to categorize fantasy fiction. Prof. Farah Mendlesohn sees four main types:
1. portal quests - characters find a doorway into a new, fantastic world, like in Narnia.
2. intrusive - fantastic characters find a doorway into the "real" world, for example Stephen King's Dark Tower series, Dracula, and Harry Potter.
3. liminal - the magical elements are suggested, but out of sight, creating a sense of mystery.
4. immersive - from start to finish, the story takes place in a fictional, fantasy world, like The Lord of the Rings.
You can also list sub-genres of fantasy, like high & low, dark, hard, epic etc. You can even consider horror and lost world stories to be works of fantasy. There's a lot of overlap.
High fantasy is set in an alternative world.
Low fantasy is set in the "real" world.
Dark fantasy combines fantasy and horror, like The Vampire Chronicles by Anne Rice.
Hard or Epic fantasy, like hard sci-fi combines magic and myth with rigorous logic to make it more believable. Examples include LoTR and Game of Thrones.
Elves: Come from medieval pagan folklore. Known as 'ælf' in Old English, earliest references come from Christian texts that described elves as either demonic or pagan, meaning unchristian. Elves were immortal, human-like, and dangerous. Elves could reward or punish people, and sometimes seduce them.
Fairies: Fairies have many different names in traditional folklore: fair folk, good folk, wee folk, and people of peace. They were synonymous with elves, and some looked just like real people, while some were short, old, and trollish. Today they're thought of as tiny people with wings––this came about in Victorian times.
Orcs: Orcus was the Etruscan name for Pluto, god of the underworld, who ate people. The term was also mentioned in Beowulf as an evil spirit, at war with God. When the Normans invaded England in 1066, they were also called orcs. The modern conception of orcs was established by Tolkein, as a race of violent humanoids, who were once elves, but corrupted by dark magic long ago, and who typically only come out at night.
Goblins: Originally spelled gobelin, these creatures were described as demons and devils in medieval folklore. Tolkein used 'goblin' and 'orc' interchangeably for the same creatures in his series.
Ogres: The origin of this word is unclear. Some say it also comes from Orcus, god of the underworld. Others say Og, the last of the giants, in the Bible. Another theory is it stems from the word Hongrois, meaning Hungarian - apparently the French didn't always like Hungarians. Or it could come from the Greek river god Oiagros, who was father of Orpheus. The first writer to use the word 'ogre' was Charles Perrault in 1696.
Trolls: Coming from Scandinavian folklore, trolls vary a great deal from story to story. In some, they're hideous, monstrous, and evil. In other stories they look and act just like regular people.
Bugbears: Originally an evil bear or bear-like spirit that stalked children in medieval folklore. Bug originally meant 'frightening' similar to bogey, as in the Bogeyman, a monster who hides in children's closets and under beds.