Fantasy has become the new rock. Similar to having alternative, punk, electronic, and hard rock, there are several different ways to divide up the genre of fantasy.
There are two major types of fantasy:
1. Low Fantasy: Your book takes place on earth but it has elements of fantasy within it. Ex: HARRY POTTER, PERCY JACKSON
2. High Fantasy: Your book takes place on another planet, in another dimension, or within a made up land (usually long, long ago, far, far, away). Examples: LORD OF THE RINGS, HIS DARK MATERIALS, THE SWORD OF SHANARA
Other: A subset to low fantasy is the genre of Urban Fantasy. The boundaries for this genre are a bit more blurred, but it generally entails that the tone of the story is darker, the themes more mature, and the location is in a city. (Oddly vague I know, but if your type of writing fits this bill, all the better since you want to narrow your genre down as specifically as possible.)
Examples: FALLEN, THE IMMORTALS, HOUSE OF NIGHT
My definition: If your book's basic plot could be the lyrics to an Evanscence song, it's Urban Fantasy.
My prediction: Given how popular fantasy has become in adult, young adult, and middle grade fiction, I expect there to be many new "genres" budding up all over the place as publishers become more and more swamped with fantasy submissions.
Which genre of fantasy do you read/write most? What new subset of fantasy do you predict will come into being?