I'll throw the ol' English B.A. perspective here into the "Fables and Fairytales" question (Got to use this degree somewhere, right?):
Fairy tales: As I've always learned it, fairy tales typical are just that, tales about fairies or mythical stories and realms. Included in that are things like the King Arthur stories, the Grimm brother's work, and writings by the likes of Hans Christian Anderson. Not exclusively them, but from that basis you can get the general drift that not only does it involve the fantastic happening, but these happenings can occur to anyone ranging from nobles to peasants. (Although typically there was an air of nobility, i.e. knights and kings and princess and such, involved in these stories. Again, this is just the way that I was taught.)
Fables: These can have fairies in them, and they do have fantastical elements to them, such as anthropormorphic animals or geese that lay golden eggs, there is always a moral or lesson behind them. To that the end, the one hearing the fable is supposed get a mini-life lesson from the story; such as be content with what you have in the Golden Goose fable or the slow work and steady pace of the turtle in the Tortise and the Hare is better than speed and cockiness of the aforementioned hare.
So, for example, I would expect a design that features princesses getting rescued, or a Rip Van Winkle tale would work as a fairy tale.
However, any designs about the tortise and the hare, or ugly ducklings, or frogs and oxen would likely be out.
What say Tgentry about this?