In at least one manner of speaking, fantasy is the original mode of literature. Beowulf, The Iliad, The Epic of Gilgamesh, Journey to the West, etc.--all clearly full of fantastic elements, even if they weren't necessarily meant in the same sense that modern fantasy writers mean them. The modern fantasy genre no doubt springs from the fascination in the West with medievalism, romances, Orientalism, "The Northern Thing" (i.e. fascination with Germanic folklore and mythology) and other movements in the 1800s. Coming out of this environment, George MacDonald and William Morris wrote what are considered to be among the first true fantasy novels: The Princess and the Goblin, Phantaste, The Well at the World's End, etc. While holding out a fairytale and medieval romance vibe to them, both were content to essentially invent the "secondary creation", or a completely fantastic setting for their stories to take place in.
Sadly, both were often considered works more suitable for children, and for many years, anyone who wrote anything fantastic had their work relegated to children's literature: Peter Pan, The Wonderful Wizard of Oz, and others did not manage to break out of their "literary ghetto" in spite of their success. Lord Dunsany, H. Rider Haggard, Rudyard Kipling, Edgar Rice Burroughs, Abraham Merritt and others started changing this, at first gradually by incorporating fantastic elements that had a tinge of scientific "plausibility" around them, and had characters who were more rooted in the everyday world that their readers knew interacting with these fantastic elements.
Concurrently, another genre had been developing for a number of decades that also featured fantastic, supernatural elements, but which utilized them in another fashion entirely: gothic horror, best exemplified by the works of guys like Horace Walpole, Edgar Allen Poe, Bram Stoker, Charles Maturin, John William Polidori and others.
All of these influences collided in the 1920s with the founding of the American pulp magazine Weird Tales where works of H. P. Lovecraft, Clark Ashton Smith and Robert E. Howard gleefully combined supernatural horror, secondary worlds, and even science fiction into the first uniquely 20th Century expression of fantasy. This type of fast paced, lurid fantasy adventure, often with prominent horror elements and nearly anti-hero protagonists came to be known as sword & sorcery, and is today one of the main pillars of fantasy as we know it.
In the 1950s and on into the 60s and later when these works really started gaining in popularity, the world was introduced to the writings of C. S. Lewis (the Narnia Chronicles) and even more particularly those of J. R. R. Tolkien (The Hobbit and The Lord of the Rings) which almost instantly changed the face of fantasy literature forever. Because of Tolkien in particular, sword & sorcery took a bit of a plunge popularity wise as high fantasy stepped in to achieve notable mainstream success. One of the side effects of that was that long fantasy came to be predominant. Not only long novels, but series of long novels. The Wheel of Time series, for example, is estimated to clock in at over 11,000 pages in mass market paperback format. 11,000! The Sword of Truth series and the Malazan Book of the Fallen series are only marginally shorter, and George R. R. Martin's Song of Fire and Ice series is going to be a real backbreaker too.
But this is all an extension of "Tolkienian" fantasy; one of the interesting things about fantasy in the last few decades is that it has "multifurcated" into a number of subgenres that stick to significantly different turf, for the most part. We've got resurgent sword & sorcery and high fantasy, still. We've got contemporary fantasy, some of which is little more than melodramatic romance novels with supernatural elements, but others of which are genuine fantasy set in a contemporary setting, like Harry Potter or Harry Dresden. We've got New Weird stuff like that written by China Mieville or Alan Campbell. We've got military fantasy, like Glen Cook's Black Company series. And we've got fantasy that's more difficult to classify that just does it's own thing; Scott Lynch's heist/caper fantasy, or Joe Abercrombie's cynical revenge fantasies and anti-fantasties being another.
I've sampled quite a bit of all of these modes, but my own personal history is a tortuous affair of what I like and don't like. I was predisposed to like fantasy; as a small child I already loved fantastic things: dinosaurs, dragons, monsters, fairytales and the like. I discovered fantasy as an older kid with the high fantasy works of Lloyd Alexander, C. S. Lewis and J. R. R. Tolkien, and for many years, high fantasy and fantasy overall were nearly synonymous to me. This lasted through my teenage years, most of my twenties, and on into my thirties, although I was aware of other modes of fantasy, especially sword & sorcery, I preferred high fantasy.
As my thirties started getting a little long in the tooth, that started changing. Part of this is that the demands on my time make the prospect of reading phone-book sized novels that are only one part (of ten or more) in a series seem much more daunting than it would have when I was younger. But part of it, honestly, is that I've just become bored with Tolkienian fantasy. I've also come to realize that nobody besides Tolkien really does it well enough. Since being too similar to Tolkien invites comparisons that aren't likely to be flattering, I've decided to distance myself from Tolkienian fantasy in the last few years, and have looked at sword & sorcery influences, dark fantasy and horror influences, and just plain old blending of tropes and conventions from other genres altogether into my fantasy.
In this, I believe I'm part of a greater cultural zeitgeist of expanding and pushing on the rather calcified and falsely rigid barriers of what is considered fantasy and what isn't. Which makes my timing fortuitous, because I've got a lot of source material to borrow as I'm looking for ways to expand my own gaming enterprises in new directions.