Low fantasy is a subgenre of fantasy, usually contrasted with high fantasy. Unfortunately, the formal definition has drifted from its popular definition, making it a rather confusing term.

Formally, low fantasy is any fantasy in which the primary setting is the real world, and magic intrudes. As you may suspect, there is a large overlap with magical realism and urban fantasy. Under this definition, low fantasy includes works such as Susan Cooper's The Dark Is Rising, much of Roald Dahl's work, Good Omens by Neil Gaiman and Terry Pratchett, Bad Machinery, Deathnote, and arguably most superhero fiction. There is some debate if works like Harry Potter count, as they are technically in our world, but essentially have a world apart in which all the magic takes place. Narnia and The Wheel of Time would be high fantasy, as the adventures do not take place in our world.

However, the popular usage of the term is a story that is more down-to-earth than traditional, epic fantasy. These stories are more realistic, less heroic, and have less focus on traditional, mythic magic. Under this definition, you might consider Alice's Adventures in Wonderland, the Discworld books, and the works of Jasper Fforde or Diana Wynne Jones to be low fantasy, although they would not qualify under the original definition.

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