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Traditionally set in some recognized period of history—such as the Dark Ages, the Victorian era, the Enlightenment, early Rome—these works insert magic matter-of-factly into daily life. The challenge here is to find a plausible, interesting alternative to some turning point in history, given that magic played a hand. And then, of course, the requirements of a good fantasy novel must be fulfilled.
Alternate History versus Historical Fantasy Fiction
Alternate history is set in a place where actual history has deviated from current historical accounts. Think of it as a parallel history to our own, one where events may have been dramatically different. Alternate history can include fantastical elements. One can have alternate history where the rules of the universe follow that of our own or an alternate fantasy where magic works (you might call this alternate history fantasy).
Historical fantasy fiction, on the other hand, takes place during our own history. The history is just filtered through the eyes of fictional (or real, but fictionally reproduced) characters. Historical fiction when it includes fantasy elements or magic is categorized as Historical Fantasy.
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