Good points Nogrod. I like too much magical realism as it is, now I can't make a good choice for my list!
I think by fantasy, it might mean by the simple lines of such genres of high fantasy, and s&s fantasy. Though, hrmm. Now I'm in a tizzy.
As for historical fiction, I don't think that is exactly fantasy in a whole sense. It may be complete fabrication of an author's mind, but it has ties to actual events that took/take place in our own realistic history, not of a fantasy world. Though, no doubt some authors borrow from our history to make compelling fantasy.
The question I guess is, if a work is centered in, or has ties to a myth or fairytale of historical value (things like: Arthurian Legends, Avalon, Atlantis, Grimm Tales, Greek Mythology, etc), is it really and wholly 'fantasy'? Because, let's say someone writes as to what happens after a myth takes place, such as, after King Arthur dies in the Arthurian Legends, and writes on from there. Their work depends amazingly on the bits here and there that are commonly agreed upon as being 'Arthurian', but they are making everything aftrewards in their writing their own design.
Then the whole debate of magical realism, where obviously magical things pop into blalantly realistic scenarios, and I can make the moon come out at noon and the sun appear for a short time during midnight.
The trick I guess with magical realism, is that the whole 'magic' thing has to appear somewhat unforced. That the figures or whatever in the story are pretty comfortable with the 'marvelous reality' of things.
Still, I think the 'fantasy' in this case deals more on the lines of high fantasy or more to do with worlds where there is very little or some ties to real world things (undoubtibly these include ethics, philosophy, 'good' vs. 'evil', etc which appear all the time in fantasy, but were of reality based creation).
Now I have to go think over a list, argh. The choices...
~ Musing Again Ka