Fiction: How Real Is It?

My son posed an interesting question to me when he was nine years old. He stopped behind me and peered over my shoulder while I was typing.

“Mom, if it’s fiction it’s make believe, right? I mean you make it up and it’s not the truth, right? And it’s okay to do that, right?”
Three interrogatory ‘rights’ from my son and I knew something was wrong.
He squirmed through my interrogation and finally coughed up the note home from his teacher that I had to sign for class the next day. He’d been caught ‘writing fiction’ about two boys in grade six who had terrorized the younger kids on the playground. His fiction included unfounded facts about their upbringing that he may have heard at the dinner table. (‘raised by wolves’ was meant as a figure of speech; who knew he paid attention to anything I said.)
The teacher wasn’t particularly upset, having had those boys in her class two years earlier, but none the less a note had to come home.

So how real does fiction have to be?
When we ask our readers to suspend their disbelief we need to give those readers a tenable, alternate belief system.
The facts on which we build our stories must be commonly acknowledged to be true. We chose non refutable facts—true events, real people, actual locations and time periods then anchor a layer of our version of all of the above to those facts.
My new Grace Marsden mystery, The Inn Keeper: An Unregistered Death, involves elements of the Underground Railroad in Illinois.

Fact: An Underground Railroad operated in the Hinsdale area at Graue Mill.
Fact: Frederick Graue and his wife Mary hid freedom seekers from slave catchers.
Fiction: Frederick Graue had a brother who pretended to be an abolitionist.
Fiction: This brother had a home in Oak Park.
Fact: A known Underground Railroad station was in Maywood, Illinois.
Fact: Stations sometimes had secret panels to secret rooms and underground tunnels.
Fiction: Hidden cupboards are discovered during a rehab of the Oak Park home.

What are the differentiators between the fact and fiction statements? Could they be successfully interchanged?
If readers can ‘hang their hat’ on some of the statements why not all? There in lies the weaving of the story we want to tell in the framework we agree to be true.
I love a mystery that could have happened if only this or that slight change in reality had occurred. Who is to say it couldn’t? If we’ve done our job properly—no one!
Luisa Buehler