Literary realism is founded on a belief in an objective reality that can be delivered without distortion through the lens of the writer. The writer attempts to present a faithful representation of reality in their fiction ... one supposes that if they were to ultimately succeed we would have to call it non-fiction.
When you couple realism with a qualifier you are immediately acknowledging a choice of emphasis. And straight off the bat we're distorting reality by focusing on one aspect.
If one were to attempt a faithful representation of reality in fiction it would necessitate covering all the bases. If we looked at something as complex as nations going to war we would want to present the politics, economics, bureaucracy, the agriculture, the industry, the warfare, the individuals, the labourer working unexcitingly at dull tasks, the laundries, the sewage treatment, the movers and shakers ... all of it. Reality is a big thing. Much of it is quite dull.
So when the term gritty realism is employed it is not, as it is often accused of being, the case that the person is saying that 'gritty' is 'realistic', it is not that the term is implying that focusing on the 'gritty' aspects of life makes the fiction more realistic. Not at all. What it is saying is that this fiction is going to focus on the gritty aspects of a situation (a choice) and to attempt to present those realistically.
Now this is not something I claim to do. I have no interest in doing something like that. I write stories I hope are entertaining (sometimes by being exciting, sometimes by being thought provoking, or funny) and I focus on stories that interest me and that I would enjoy reading. People may label them as they want. I do not label them. And thus nothing said about my work in particular projects back onto the term gritty realism. It is a term in its own right, not defined by the handful of fantasy books at which people have thrown it.
As a separate issue, it seems to me that the more significant move toward 'realism' in the genre has been in terms of portraying more convincing humans. I certainly notice that many (not all) characters from 80s fantasy feel ... thin, they're rarely conflicted, they rarely show moments of doubt or weakness, their interest is generally plot focused, their deeds plot serving. Whereas in more recent fantasy I find that many (not all) characters feel closer to real people and are as a consequence more easy to identify with and compelling to follow.
I feel that this flavour of realism, that has chanced to parallel the rise in 'gritty' realism to some extent, is often wrapped up with it (GRRM's books being a prime example) leading to further confusion and conflation of the terms.
TL:DR = Gritty realism doesn't imply a work that suggests a dark and gritty view of the world is realistic. It implies a work resulting from the decision to focus on those aspects and present them realistically.
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