>>If you can find a copy of Bordertown, a chronicle of the Borderlands by Terri Windling and Mark Alan Arnold, I would recommend picking up a copy.>>

I've recently read three books that are a spin off of these (I'd love to find the orginal collections just to read the beginnings)....

"Elsewhere" and "Nevernever" by Will Shetterly
His wife, Emma Bull, also wrote one but I don't remember the name.

Her "War for the Oaks" was a great read. My library classifies these are 'urban fantasy'. Mercedes Lackey also has a collection of books on elves in modern settings, starting with "Bedlam Bards."

There's plenty of good fantasy out there without a single elf or dwarf or magic sword, but it is overshadowed badly by the never-ending series of doorstop novels often written by writers of little talent. I can't speak for my talent, but I just completed a 100,000 word fantasy that features not a single one of those things, nor anything related to them, so I know it can be done by better authors than yours truly, and indeed it it.

Of course by now everyone at least knows about Jonathan Strange & Mr Norrell, which sort of turns the whole genre upside-down and gives it a good shaking.

China Miéville (Perdido Street Station, this year's Hugo finalist Iron Council, etc) has a "New Weird" take on modern fantasy:

"Two untrue things are commonly claimed about fantasy. The first is that fantasy and science fiction are fundamentally different genres. The second is that fantasy is crap.

It's usually those who claim the first who also claim the second. The idea is that where SF is radical, exploratory and intellectually adventurous, fantasy is badly written, clichéd and obsessed with backwards-looking dreams of the past - feudal daydreams of Good Kings and Fair Maidens.

It's easy enough to distinguish the writers at the far edges of the spectrum - Asimov versus Eddings, for example. But the problem with the 'sharp divide' argument is the number of writers - often very brilliant ones - who fall in the middle, who blur the lines. David Lindsay, William Hope Hodgson, Jane Gaskell, H.P. Lovecraft, Clark Ashton Smith, Gene Wolfe: the list could go on. These are writers for whom the 'fantastic' is not ethereal and wispy but tough and real, where 'magic' operates like science or science magic, and where the sense of subversion, of alienation, of sheer strangeness that saturates their work defies easy categorisation as SF or fantasy."
(entire piece at www.panmacmillan.com/Feature...ate.htm)

He mentions just a few writers doing good fantasy today. There are many others.