Here is the introduction to B S Johnson's Aren't you rather young to be writing your memoirs? (1973), which grapples with the idea of truth and realism, particularly in lines like this:

Many thanks for opening this discussion, Don Basilio. I'll contribute to it later.

In the meantime, here's a recent article about novel reading:

http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/03/15/do1505.xml

Don't mention it, pim.  Gosh isn't that Philippa Hensher a show-off.

Actually I should be ashamed of myself lapsing into 1950s style queen speak.  The fact that he is an out gay is the most admirable thing about young P Hensher.  But, golly, isn't he a pretentious show-off.  Read five novels every week from the age of five, and reading Proust in Italian translation.  Frankly, I don't believe him

I'm still confused as to the difference between realism and naturalism.

Any more takers here?

Realism, however defined, is a difference between novels and poetry, surely?  Are The Iliad, La Divina Commedia or Paradise Lost realistic in comparison to Madame Bovary, Robinson Crusoe or War and Peace?  Presumably not, but Bleak House, The Ambassadors or The Idiot are not tele-realism by any means.

So is any fiction realistic at all?

In its own time, the Iliad might well have been looked on as supremely realistic: so far as we know there was little else to compare it with, apart from the Odyssey, and they are very different works.

 Neither is naturalistic (indeed both involve the supernatural) but the Iliad in particular examines the human predicament and individuals' reactions to what life/Fate/The Gods may throw at them in a fashion which still forms the pattern for the tradition of much narrative literature today, with a wealth of strong characters who are almost certainly the first representations of many recognisable archetypes found ever since in European literature. Apart from the Babylonian/Sumerian Gilgamesh epic (which may even have lent it some of the themes) there's almost nothing we know which prefigures this astonishing awakening of narrative ingenuity, and the earlier work has none of its psychological insight. It might seem a little less relevant to our lives today, but at the time of its shaping and oral transmission it must surely have struck almost every listener with at least one situation or feeling that they could identify from personal experience, and understand only too well.

 Since there was nothing else created that could have possibly have brought these things home to them so clearly, would it not have seemed supremely realistic? Isn't realism in art always relative, and conditioned by what has been previously judged as realistic ?