Arguably, any film relying on fictional situations and characters might be considered fantasy. Indeed Hollywood's "dream factory" prides itself on transporting its audience to myriad fictional settings. In practice, however, fantasy is a term reserved for a specific subset of films featuring characters, events, or settings that are improbable or impossible in the world as we know it. This loose definition yields a staggering array of films that vary widely in subject matter, tone, and intended audience. The children's film Willy Wonka and the Chocolate Factory (1971), for example, would seem to have little in common with Conan the Barbarian (1982), yet both are considered fantasy because of their fantastical characters and events. While some films feature isolated moments of fantasy in otherwise realistic or dramatic contexts, the designation fantasy is usually reserved for movies whose imaginary elements pervade the entire story. For example, despite the miraculous rain of toads occurring near its end, the gut-wrenching drama Magnolia (1999) is not considered fantasy.
In addition to the wide variety of films that fall within the fantasy classification, confusion often arises about science fiction and horror. Although many consider these to be separate genres, their relation to fantasy cannot be overlooked since all three revolve around elaborate fantasy scenarios. Defining fantasy film as a discrete genre is problematic due to the large number of story types it encompasses, and therefore it may be more useful to consider fantasy as a "mode" rather than as a genre. Seen in this light, science fiction and horror are genres that express distinct aspects of the fantasy mode, while other story types might be considered as additional subgenres of the mode.