In an excellent essay on fantasy Teresa Nielsen Hayden elegantly points out the problem with trying to define fantasy literature:
It’s hard to come up with a good definition of fantasy literature. It’s easy to come up with a definition that includes fantasy, but most such definitions also take in a lot of other kinds of storytelling. For instance, it has been observed that, in a sense, all fiction is fantasy. This is true, but it isn’t useful.
That’s why my favourite definition of science fiction is Damon Knight’s: “science fiction is what I point to when I say science fiction” (or something like that). Most of us know what we mean when we talk about a certain genre, trying to narrow it down absolutely, and get other people to agree with you is futile—way more trouble than it’s worth.
Update: What Knight said was something like this: “Science fiction is what we mean when we point to it”.