There’s a fair bit of crossover between folk and fairy tales; the latter don’t always have fairies in them, nor do they all end happily ever after.  Loosely speaking, fairy tales are a sub-genre of folk tales and differ mostly in that they often include magical elements and/or fantastic creatures. They are commonly set in the real world, but unlike legends for instance, they are neither time nor site specific. Everything happens long ago and far away and is designed to drive the plot forward by the swiftest of means, including the characters who possess little in the way of inner lives. In fairy tales, pretty much anything is possible – the wind counsels, rivers sing, animals speak, and people and objects frequently undergo transformations.

‘Wonder Tales’

Many folklorists prefer to use the German term Märchen or ‘wonder tale’ when referring to fairy tales.

The notion that fairy tales are something unique to a child’s world is a relatively recent phenomenon. Once upon a time, they, not unlike Grimm’s folktales, were meant for the whole family. In the Victorian era as their popularity grew with younger audiences, many tales were altered to include temperance themes and to teach morals.

Charles Perrault

Charles Perrault collected peasant tales a whole century before the brothers Grimm, which he embellished and adapted, set down in writing and told to the royal court of Louis XIV, to which he belonged.  His published tales were instant hits in his lifetime and include such popular stories as Cinderella, Sleeping Beauty and Bluebeard.

Hans Christian Anderson 

Best remembered for his children’s stories, Hans Christian Anderson’s writing was by no means limited to fairy tales. He did however take the fairy tale genre to a new level by writing a vast number of original stories himself – these include Thumbelina, The Princess and the Pea, the Little Mermaid, the Steadfast tin Soldier and The Ugly Duckling. His technique of making inanimate objects such as toys come to life would later be adopted by authors Lewis Carroll, Beatrix Potter and AA Milne.  He continued writing until 1872 just three years before his death.

For a fairly comprehensive explanation of the history of fairy tales I suggest: http://www.surlalunefairytales.com/introduction/earliesttales.html

To further explore folk and fairy tales online I recommend: The Journal of Mythic Arts http://endicottstudio.typepad.com/articleslist/

Jack Zipes/Utopian Tendencies of Oddly Modern Fairy Tales – http://www.youtube.com/watch?v=aMdLXij02fU