Alexe Brode explains why:
The question of "what is fantasy" is really hard to define. First, it is relatively ambiguous, meaning it has many meanings. Secondly, there are so many genres in the world, how does fantasy not fall under something else? These are just many questions that need to be answered to better understand what fantasy is in all actuality.
The word fantasy can mean anything from a mental image, imagination, a visionary idea, to even an illusion or hallucination. Fantasy is so ambiguous it is hard to come to one definition. If one was to sit down and conquer this definition it would take years. This is one genre that could fit really any type of book one reads. For example, take the definition of a mental image; reading anything can give a person a mental image if the use of figures of speech is used properly. I could read something a five-year-old wrote and probably get some sort of mental image from it.
Fiction, science fiction, horror, children's literature, each and every one of these can fall under fantasy because most if not all can lead you into a separate world where everything written in the book comes true. Would these be considered sub-genres? Or is there really a major difference between fantasy and these? Fantasy seems to deal more with dragons and magic, as the above do not. Is this the difference? Then one looks at "Snow White" or "Cinderella"--are they considered fantasy or is that children’s literature still?
In all actuality, coming up with an answer about what is fantasy is relatively hard. I guess it depends on the reader or mainly on what others think. The reader could just make up their own classification for what is fantasy, or just stick to what the editor says the genre is. Fantasy is such a broad and ambiguous term that the answer will be just as broad and ambiguous.
My idea of fantasy is one that just transports you completely into a separate world where you can't really distinguish between reality and fiction. The Jhereg book did this to me. I want more after reading the first, even more after the second, and I'm dying after the third. Now I just wish the world was like the book so I could be an assassin and not deal with school and such and just get paid to kill people. It's like an escape into a better life it seems, somewhere that someone feels safe because they know they can’t get hurt but they enjoy all of the action.
Fantasy is ambiguous. It can't be defined into a set definition. It can be one genre or many as far as we know. It is hard to tell fantasy apart from other genres because it all contains the same content and there isn't a special ingredient that separates them. So the question of "what is fantasy?" seems to still be left unanswered, because in all reality anything can be fantasy if you set your mind to it.