Urban fantasy has been defined by John Clute and John Grant as “texts where fantasy and the mundane world interact, intersect, and interweave throughout a tale which is significantly about a real city.” (cited p.64 Donohue)
Nanette Wargo Donohue elaborates, stating that “Urban fantasy’s roots date back to the late 1980s and early 1990s, when Charles de Lint published his first short story collection about the fictional city of Newford, Dreams Underfoot, and the first volumes of the groundbreaking Borderlands shared-world anthologies, based on a world created by well-known fantasy author Terri Windling, were released. These works introduced readers to the possibility of supernatural, fantastic beings in modern settings, and other authors who contributed to the development of what is now identified as ‘traditional urban fantasy’ included Emma Bull, Neil Gaiman, and Mercedes Lackey.
A folkloric tradition
[Donohue continues:] Traditional urban fantasy is highly influenced by folklore and fairy tales and often has the feel of a modern folk or fairy tale. The prose style tends toward the lyrical, the locales are modern urban environments, and the distinctions between good and evil are often subtle. … Closely related to (and, in many cases, overlapping with) traditional urban fantasy is the broader category of mythic fiction, a term believed to have been coined by de Lint and Windling and often used to categorize historical fantasy and literary fiction where the supernatural coexists with the mundane.
[again, Donohue continues:] The branch of urban fantasy currently skyrocketing in popularity is ‘contemporary urban fantasy,’ which plays on themes drawn from popular culture, including horror movies, TV shows like cult classic Buffy the Vampire Slayer, and lore about such paranormal creatures as vampires and werewolves. …Common characteristics include tough female protagonists (often with supernatural powers of superhuman strength), stronger distinctions between good and evil, grittier urban landscapes, first-person narration, and sexual tension, often between the female protagonist and a male character who toes the line between good and evil. A pioneer in this subgenre is Laurell K. Hamilton, whose ‘Anita Blake, Vampire Hunter’ novels were among the first to play on these themes.”
Ref: (p. 64 -all of the above is a citation of Donohue, including the subtitles, but the bold/green emphases are mine) Nanette Wargo Donohue (2008) ‘The City Fantastic’ Library Journal June 1st, pp64-67