Historical fiction is a genre that combines factual information about historical time periods, events, and real people with fictional elements like characters, dialogue, and details. It aims to present a believable story that is supported by historical evidence and portrays characters and settings realistically without conflicting known facts or relying on stereotypes. The document provides examples of short stories and novels that fall into the historical fiction genre, spanning various eras from medieval England to the American Great Depression and World War II.