Fairy tales contain an element of magic, such as the classic "Cinderella." Cinderella's fairy godmother magically turns her rags into a beautiful gown, a pumpkin into a chariot and her disheveled hair into a beautiful updo. Fairy tales like "Cinderella," "Snow White" and "Sleeping Beauty" often include a princess or princess-like character that relies on the kindness of others and a prince or knight in shining armor. They also teach a moral that usually relates to mean or evil people getting a punishment and good, kind people being rewarded.
Folktales usually feature ordinary and hardworking folks who use their wits and smarts to get them out of difficult situations. One example of a folktale is the story of Babe the Blue Ox. The famous Paul Bunyan used his intelligence to help poor Babe, who was growing thin with hunger, not to hate winter so much by giving her a pair of green goggles so she would think it was summer all the time.
Myths focus on stories that try to explain something about creation or the origin of people, places and things. They also try to explain some type of phenomena, either in nature or in regards to a person who has a unique ability. The word myth brings to mind some of the famous Greek myths, such as Achilles, the baby who was supposedly dipped in the River Styx except for his heel. This myth exists to explain why this great warrior was nearly indestructible.
These types of traditional fiction stories usually feature a heroic or tragic character at the center of the tale. A famous example of a legend would be the King Arthur tales. King Arthur was considered a great king, but he was not immune to difficult times and trying obstacles, which only adds to his legendary status.
Fables are short, simple stories that often use animals with human characteristics to help teach children important life lessons in entertaining, memorable ways. One example is Aesop's fable "The Tortoise and the Hare," which teaches children not to be boastful and instead work hard consistently to be rewarded in the end. "Animal Farm" by George Orwell is a more grown-up fable warning about greed and power.