Fantasy allows an equal or even broader sweep of imagination than
"hard" SF, where anything goes so long as the world-building is done
carefully and plausibly. Maybe pigs can fly on Etavin, but the
author had better lay a pretty thorough groundwork for it, so that the reader
accepts this, rather than rejecting the idea and the book. Fantasy
encompasses everything from traditional swords and sorcery to vampire stories.
Anything that puts a kink, small or large, in "reality". Whatever that is.
Fantasy is the oldest form of fiction, starting with heroic
quests like that of Gilgamesh, and including the tales of the War at Troy,
complete with talking horses and ghosts. Most fantasy depends on magic of one type or another, perhaps several types
in one book. Some worlds allow their characters endless permutations, like T.H. White's
Merlin conjuring all sorts of things for young Arthur in The
Once and Future King. Other books take a narrower view, and those are
harder to write, because there are so many more strictures on what the hero
can use to get himself out of trouble. On the other tentacle, it's easier
for the author to keep the protagonist IN trouble, if magic cannot do
all.
Soft SF can have elements that seem to be part of the fantastic but are not,
in that perhaps, like Anne McCaffrey's world of Pern, the place
was founded by spacefaring people from Earth. Science created her creatures
called dragons, and there is nothing magical about the dragonriders except her deft
storytelling. Pure fantasy runs toward Lord of the Rings by J.R.R.
Tolkien, or in the total opposite direction: Metal Angel by Nancy
Springer. Both of these depend upon some element of non-science to make
the plot work. If you call your magic magic without a qualm, it is fantasy.
If you call it psionics, you're probably soft SF or science fantasy.
There are endless permutations on the fantasy genre. There is such tremendous
crossover in the elements of fantasy that it is sometimes impossible to stick a book into a single
classification. Some may quibble with our categorization, and you may see some of these twice!
Heroic Fantasy, also known as Swords & Sorcery or Epic Fantasy
Gentle Fantasy, also known as Magical Worlds
Gritty Fantasy
Dark Fantasy
Historical Fantasy