[crane3]

I subscribe to the definitions of "fiction" & "non-fiction" in the Shorter OED.

Stories in the "fiction" category does not have to reflect reality & can contain any amount of falsehood; but then some books in "non-fiction" also has falsehood whether unknown at the time, ignorance or deliberate; falsehood can also be unintentional because of the writer's perspective of what is "important". [SNIP contentious example]

For me, "historical" fiction is just an invented story type that has the background backwards in time. Of course, after any story that is written is already in the historical past time frame.