From Tolkien's "On Fairy-Stories," again:
"Fantasy is a natural human activity. It certainly does not destroy or even insult Reason; and it does not either blunt the appetite for, nor obscure the perception of, scientific verity. On the contrary. The keener and clearer is the reason, the better fantasy it will make" (74-75).
From an interview with Philip Pullman published in The Lion and the Unicorn (23:1):
"People talk to me, or talk about me, as if I were a fantasy writer, and then expect me to know all about other fantasy writers. Northern Lights [The Golden Compass, in the US] is not a fantasy. It's a work of stark realism."
[edited to add one more bit from Tolkien:]
Probably every writer making a secondary world, a fantasy, every sub-creator, wishes in some measure to be a real maker, or hopes that he is drawing on reality: hopes that the peculiar quality of this secondary world (if not all the details) are derived from Reality, or are flowing into it" (87).