Not all stories are derived from truth but the feelings are true. Fictional books are full of ideas, fantasies and imaginations. These imaginations and fantasies exist in our minds and all an author does is to give them a voice.
What is fiction?
Fiction is make-believe, imaginary. If a story's true, it's non-fiction. If it's made up, it's fiction.
Novels are fiction.
Fairy-tales are fiction.
Newspaper articles are nonfiction (even if they "slant the truth," they are intended to be read as factual). So are encyclopedia articles, biographies, and memoirs.