In days of yore, I worked at the public library. One day, an odd young man came in (he had, on a previous visit, used the library phone [small town, long time ago] to cold-call a dude ranch and blurt, "Can I get a job there?" which had caused me to flee the circulation desk and hide in the stacks to laugh), pointed to the A-Z shelves and asked, "Um, fiction...that's fake, right?"
I don't remember exactly what I said. I do remember that laughter, unless maniacal, was not one of the responses I considered. I also remember that, being in my place of employment here, I kept my mouth shut for several beats. No Mount Vesuvius of righteous indignation. I suppose it's possible I said "WHAT?" although not that loudly. Eventually, I did manage to burble that yes, nonfiction was the factual stuff with the Dewey decimal numbers on the spines, and fiction was imaginative story, invented by the writer.
I don't really want to segue into discussing the worth of fiction, as suggested by questions and comments we've all probably heard: "How am I supposed to get anything out of stuff that isn't real?" "Fiction is all lies." (For the record, I can't stand when writers say fiction is lies.) "Fiction is just made up, it's indulgence, not worth my time." I want to stick to the definitions. IS fiction lies, fake, false, untrue? IS nonfiction anything that's 100% factual, or "happened just that way"?
It ain't that simple.
I've seen stories that use characters, conflict, plot, and dialogue, accompanied by a note saying the whole incident happened "just like this," so it's nonfiction. Nope. To any editor or reader seeing it, it's fiction based on a real event, and could probably use some changes (fictionalizing) to make it an even better story. Unless you have clearly signaled that this is a personal experience essay, say, or an anecdote meant to illustrate a point you're going to discuss, this "true story" material wants to be, and is, fiction.
I've seen articles that use characters, conflict, plot, and dialogue to teach history or nature lessons, in which kids ask questions like "So why is the sky blue, Mr. Jones?" and Mr. Jones answers, "Why, Billy, the sky is blue because of the way Earth's atmosphere scatters sunlight," accompanied by a note saying this is fiction. Nope. There's no dramatic or emotional arc. This is a presentation of factual material about how the Earth's atmosphere interacts with light. The goal is to inform. Though it's not written in a style likely to sell today, it's nonfiction.
Is fiction false? Never -- not so long as it puts its finger on the way life and relationships work, the way actions have consequences, the way emotional journeys and character growth come about. Is fiction "made up"? Not all of it. Plenty of events and places occur in fiction that were drawn from real life.
Is nonfiction true? Not if it contains errors. Not if it's simply the best understanding of the day, liable to be proved wrong 10 or 100 years from now. Not if it's solely the opinion of an op-ed writer. Like fiction, nonfiction is filtered through writers who have a particular world view, and that makes a difference. Is nonfiction factual? Yes -- to the best of our knowledge and belief. But if it's found not to be factual, does that make it fiction? No. It makes it bad nonfiction.
One of my favorite quotes on this subject goes like this: "Nonfiction is facts; fiction is truth." But fiction not only has truth in it; fiction has facts in it. Often lots of them. Historical fiction may spring first to mind. But plenty of contemporary fiction, from legal thrillers to police procedurals to books that delve heavily into any pursuit (horse racing, the space program, zookeeping, fashion, whatever) are filled with facts that make the story plausible. Just as you can learn a lot, often painlessly, by simply living and being exposed to this or that, you can learn a lot, often painlessly, by entering a good piece of fiction and being exposed to this or that.
Fiction presents a character with a weakness, a need, and a conflict, and takes him or her through struggles to a decisive battle and an outcome, saying something about life in the process. Nonfiction is (usually) direct writer-to-reader attempt to teach, inform, express, inspire, or persuade.
Good nonfiction, and good fiction, are both true.