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WTF is URBAN FANTASY?
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Urban fantasy is a sub-genre of fantasy defined by place; the fantastic narrative has an urban setting. Urban fantasy exists on one side of a spectrum, opposite high fantasy, which is set in an entirely fictitious world. Many urban fantasies are set in contemporary times and contain supernatural elements. However, the stories can take place in historical, modern, or futuristic periods, and the settings may include fictional elements. The prerequisite is that they must be primarily set in a city.
-Wikipedia
Apparently it's a genre of low fantasy that takes place in the "real" world with supernatural stuff added (as opposed to high fantasy, which would take place in some other created world, like narnia or nirn or whatever). ETA: and takes place in a city, obviously.