Short answers, pulled from the story.
The very first written fiction emerged as a fluid blend of history and myth before the distinction between fact and invention existed. Greek poets like Homer and Hesiod wove imaginary characters into oral tradition during this early period. Distinctly fictional work began to be recognized as separate from historical or mythological stories during the imperial period of Ancient Greece.
Miguel de Cervantes wrote the first modern novel Don Quixote in the early-17th century. This work fundamentally changed the landscape of storytelling by introducing a form that allowed for deep character studies and complex plot structures. The novel became the primary medium of fiction during the 18th and 19th centuries.
Literary fiction is often defined by its focus on introspective in-depth character studies rather than the plot-driven narratives of genre fiction. Literary fiction is frequently described as elegantly written and lyrical with a tone that can be darker and a pacing that may be slower than popular fiction. The line between the two is not always clear as major literary figures have employed genres of science fiction crime fiction and romance to create works of literature.
Jules Verne published the novel From the Earth to the Moon in 1865 which predicted technologies that were not realities at the time of the work's creation. The events described in the novel only became a reality when astronauts Neil Armstrong and Buzz Aldrin landed on the Moon in 1969. Science fiction serves as a branch of speculative fiction that supposes technologies that are not realities at the time of the work's creation.
The Internet has had a major impact on the creation and distribution of fiction by calling into question the feasibility of copyright as a means to ensure royalties are paid to copyright holders. Digital libraries such as Project Gutenberg make public domain texts more readily available while the combination of inexpensive home computers and the Internet has led to new forms of fiction. Countless forums for fan fiction can be found online where loyal followers of specific fictional realms create and distribute derivative stories.
Fictionalization is the use of real events or real individuals as direct inspiration for imaginary events or imaginary individuals. The 1940 satirical film The Great Dictator in which English actor and comedian Charlie Chaplin portrayed the eccentric despot Adenoid Hynkel is a prime example of fictionalization. This process of altering actual happenings into a fictional format known as dramatization is often used in theatre and film to create a narrative based partly or wholly on fact but written as if it were fiction.