How Do You Segregate Fantasy and Horror?

An iconic Fantasy villain,
with his +1 cleaver.

From an early age I didn't understand most genre distinctions, and especially why stories weren't supposed to enter other territory midway through. This came to mind recently as I struggled over recommending Horror novels to someone who prefers Fantasy. John Ajvide Lindqvist's Let the Right One In, for instance, is technically Fantasy - it's got vampires burning in sunlight like any of a thousand Urban Fantasies. But it's widely recognized as a great Horror novel rather than a great Fantasy novel.

I've asked this on Reddit today, and will ask the blogosphere as well: how do you segregate Fantasy from Horror?

It's tricky for me as they often overlap. Horror is classically defined by the emotions it inspires in the audience (dread, tension, fear), whereas Fantasy is classically defined by things we believe to be unreal existing in the story (dragons, magic swords, other worlds). The presence of zombies doesn't make something Horror novel: Christopher Moore's The Stupidest Angel has zombies and is alternately slotted as Comedy, Mainstream and Fantasy. You only get Zombie Horror by doing the right things with them, but if you write a Medieval world with flying wyrms, you can't escape the Fantasy label. 

Herein lies the trick, because a genre about audience emotions can overlap with a genre about items at any time, but people will still consider something Horror rather than Fantasy.

I’d argue that Pennywise and Jason Voorhees are Fantasy characters you could slot into a RPG system. Many of our scariest ideas as a fiction-loving culture are intrinsically fantastical ones we still irrationally fear in the right contexts. Paranormal Activity even has a magic system by which its demon operates, though interestingly, it’s figuring out that system that adds much of the tension to the early movies.

Yet works like Stephen King's Misery and Alfred Hitchcock's Psycho don't need any otherworldly justification. We know Horror isn’t always fantastical, just as what we usually call Fantasy doesn’t bring Horror to mind, even when Jon Snow is cornered by a wight. 

So what makes you think of a favorite book or movie as one genre?