Answer:
Historical Fiction is fiction based on real people and/or events, the only criteria being that the story is set sometime in the past. Some experts go so far as to say it has to be set in a time before the writer's birth. It can be as realistic (WWI drama about an infantry corps in the battle of Ypres) or as fantastical (Nazi zombie pirate robots taming dinosaurs and fighting aliens in Julius Caesar's backyard) as the writer wants. Historical fiction can also be combined with other sub-genres to create historical romance, historical whodunit, etc.