Key Difference: Imagination is the experience that one has when they deal with reality, or how they deal with reality, while fantasy is an unrealistic byproduct of that imagination.
It is often easy to confuse imagination and fantasy as being the same thing or even similar things. However, these are completely different from each other but highly related. Let’s understand both the terms in detail.
Imagination is defined by the Dictionary of Psychology as, “the reorganization of data derived from past experiences, with new relations, into present ideational experience”. This means that imagination is often based on real experiences, or a person’s experience with their own reality. It is safe to say that imagination is how one views the world. For some it could a half glass full, while for others it can the half glass is empty. It is often a recreation of the world. So, if one is asked to close their eyes and describe a place, they would re-create an image in their head about their perfect world and this would be imagination.