According to Oxford Dictionaries, fantasy is something that is produced by the imagination, whereas reality is something that is exists independently from the mind. A person's understanding of reality is affected by the laws of physics, social interactions and constructs, economics, politics and sciences.
Human beings experience reality through five senses: sight, touch, smell, hearing and taste. An understanding of the external world is developed not only from the information collected through sensory organs, but also through facts and theories about the way things in the world function. As a result, a person's perception of reality is likely to change with the introduction of new facts and theories about the reality of things.
Fantasy, on the other hand, is not constrained by facts and theories about the way things works but rather by the imagination of an individual. Something is a fantasy if it conflicts with accepted facts about reality. For instance, if a person were to say they saw a pig flying in the sky, his claim would be considered fantastical given the general understanding that pigs cannot fly. Fantasy also relates to events that take place in works created through the imagination of others, such as TV shows and books.