I like taxonomy. The art and practice of arranging things (organisms, ideas, postcards received, a pocketful of coins after international travel) like with like, in ever finer and more precise relationships, is a pleasure that thrills my enthusiasm for the particular.
(I do realize that I use the term "taxonomy" extravagantly and carelessly; I'm sure it would horrify any actual taxonomists.)
If there's something that bookish people love to do, it's arguing about genre classification, the names we give to certain types of books and the shelves where we keep them. My friend, the magnificent Kat Howard, calls the stories she writes "speculative fiction." Catherynne Valente, a writer whose work I admire, finds the term irritating. Margaret Atwood and Ursula K. LeGuin, two of the most brilliant authors I've ever read, have semi-famously (in a friendly way) sparred over what, exactly to call each other's work.
I have never inhabited academia, and have only recently walked into a bookshop with a foggy idea of where "speculative fiction" might be found, so I come from an entirely different, possibly uninformed, point of view.
(Yes. This is probably one of those subjects which looks like splitting hairs, storms in teacups, mountains from molehills, and etc. Unless you work in the business of books, or are armed with a taste for specificity.)
In my mind: "speculative fiction," is the label on the box where we most often throw stories of science fiction and fantasy. It is the box where anything might happen. At its best, it's a box where you find stories that refuse to accept the strictures of the literal moment they're written from while they're exploring what it's like to be a human being. They are curious about what might happen, how the world might be, if only.
I like the term. It's roomy. It tells me that the rules of the stories it contains are not exactly the rules of this particular world, at this particular point in time.
Of course, what you put in the box is a matter of personal opinion. I would put in "science fiction," which could be anything from I, Robot to Oryx and Crake to Super Sad True Love Story. If it gets its fizz of "might" by expanding on a scientific idea, either realistically or extravagantly, I think of it as science fiction.
I would put in "fantasy," including A Midsummer Night's Dream and Lord of the Rings and American Gods, among others. Angela Carter resides here, next to some of A. S. Byatt. If it plays with some kind of mythology or magic--our beliefs, familiar, ingrained, and strange--then, to me, it's fantasy.
I would also keep "magical realism." I like my (probably inaccurate) idea of what this term means. To me, magical realism identifies stories where the world is almost certainly ours, but aspects of the story's engine are unexpected, improbable, fantastical, and extraordinary. Everything is Illuminated, most of Haruki Murakami, Etgar Keret. This one is murky. There is plenty of spillage between this and fantasy. Maybe it's less soaked in the magical; maybe it only lets it through in bursts, bizarrely accepted by everyone living on the inside. Maybe it's sort of a fungus, sometimes more like an animal and sometimes more like a plant.
There could be "alternate history" (Michael Chabon, I'm looking at you) and "horror" (relatively easy to identify, though my horror shelf would hold both Peter Straub and Zoe Heller).
I guess that the whole point of putting things into boxes and labeling them is to make them easier to find. If you like this, then you might like that because they are cousins or residents of similar countries. These boxes aren't the same as the ones that make up "good" and "bad," "worthy" and "un-." They're the boxes that make up kingdom and family, regardless of how much you love or respect a particular specimen. It's one kind of division (work in a bookstore and you gather all kinds of others: "books for airplanes," "books with white covers," "books for people who are ill," "books for people who are tired of falling in love.") and one kind of terminology. Of course, what we call things is important, because it's a reflection of how we see them. Values and prejudices are all tied up with names. I know that lots of people conflate "speculative fiction" with "stuff I wouldn't be caught dead reading on the train," or "stuff that doesn't win proper awards," but it's also just a box and you can always change what people think belongs inside.
Besides, categorizing, organizing, and boxing things up is fun. And you can always rearrange it if you want.