Let us begin with fairytales. Just the phrase "Once upon a time" implies that the story is presented above or outside of time as we see it or know it currently. The word, fairytale, alone gives us a clue that the story is not true because the word fairy implies that it's make believe, pretend or fantasy. (I know some people believe in fairies, but I'm not going to go into that, OK?) Fairytales are usually written down on paper, for children. They are usually told for the purpose of entertaining, while giving a moral message. Not all fairytales can have a happy ending. And in some cultures, their fairy tales do not have a happy ending ...providing moral teachings rather than entertainment?
In the bible Jesus tells parables to get His message across. Jesus does not use any specific names but simply says, "One day a fisherman ..." The same thing goes for fairytales. They often begin, "Once upon a time..." but never really tell the exact time. And the characters are often "A Princess" or an "Evil Witch" living in "A Land." In more sophisticated fairytales, they are given specific names, such as "A Witch named Esmerelda". Fairytales do not always have to be long ago. A good example of a modern fairytale is "Star Wars." It is set in the future, with Good vs. Evil characters; and, with a moral message that good always wins over evil. It is also set in a time and place (planet?) none of us have yet to experience, if ever.
Fairytales, often have characters who have supernatural or magical powers. Whereas legends seem to have characters with simply extra human capabilities, but nothing really magical.