My answer was "If it has swords it is fantasy, but if it has ray guns it is science fiction."
Le Guin is thinking about the way in which characters can be both people in a story and also symbols: that at one level Gollum is a Hobbit who desires a powerful magical Ring, and happens to become the guide of Frodo, another Hobbit who resits the Ring's temptation. But looked at another way, Gollum is Frodo's distorted reflection: he represents what would have happened if Frodo had succumbed to the Ring. Gollum tripping over his silly feet and falling into a volcano is a dumb event which just happens to happen; but it also represents the fact that the Quest can only be completed by Frodo's dark side -- what Le Guin calls his Shadow. (Astonishingly, this is also the plot of a Wizard of Earthsea.)
C.S Lewis complained about Dickens' handling of the character of Jingle in the Pickwick Papers: it is okay, he said, to ask the audience to laugh at a comedy rotter; but to show the baddie facing the real-world consequences of his actions is not playing fair with the reader. I have found this a problem in "serious" situation comedies like Rev. or even Friends: the more real characters become, the harder it is to laugh at their comic antics.
One of the things we like about High Fantasy -- and superhero comics, and cowboy stories -- is that the differences between good and evil are exaggerated. Black hats are crueller and more callous than any actual cattle rustler is like to have been; white hats are kinder and less corruptible than we can really expect from our police officers. This doesn't necessarily imply a simplistic morality: High Noon is quite a sophisticated little morality play exactly because Gary Cooper is so perfect and and Lee Van Cleef so nasty. Fantasy takes it a lot further: a Black Hat on a Black Hatstand in the Land of Mordor where the shadows are leads an infinitely large posse of ugly deformed Uruk again armies of immortal, beautiful, incorruptible cavalry with the light that existed before the sun and the moon literally shining out of their arseholes.
I am trying very hard to be a semi-professional writer and have taken the leap of faith of down-sizing my day job.
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