A fairy tale is a type of short story with a strong motif, often times with elements of magic or enchantments and typically features fantasy characters such as fairies, goblins, elves, trolls, dwarves, giants, mermaids, gnomes, ect. A "fairy tale" or "fairy story" usually dose not contain more than superficial references to religion, actual places, people, and events; they take place once upon a time rather than in actual times. Any far-fetched story or tall tale that not only isn't true but couldn't possibly be true may be referd to as being a 'fairy tale'.
"A tale of some length involving a succession of motifs or episodes. It moves in an unreal world without definite locality or definite creatures and is filled with the marvelous. In this never-never land, humble heroes kill adversaries, succeed to kingdoms and marry princesses." -Thompson's definition from his book The Folktale