Originally Posted by Gideon
Igor nailed it... specifically genre fiction refers to fiction that has a genre.. Fantasy, SciFi, Mystery, etc. Usually it is formulaic and may deviate here or there, but will follow a certain pattern so with fantasy you may have hero's journey, or the hard boiled detective in mystery, etc. This is in contrast with literary fiction which doesn't necessarily follow any set pattern, may cross many genre lines, and is usually much more metaphorical.
Fantasy and science fiction do not really follow these patterns. You could also argue that literary fiction is a genre.