Um, irrealist naturalistic. I'm thinking of things like, say, "this will be a story of some people who live in a house, as narrated by their couch. It's clear that it's just a convention -- the couch never *does* anything uncouchlike, it's just given a point of view, and the story is told through it. Thus, the *experience* of the story is radically different from the way we usually experience it, but if you think about it you can easily translate the events narrated into those we know"
Sounds like a bad idea for a story, and maybe it's not even what we should put in that box. Maybe another example is Crying of Lot 49. It's sort of a secret history; it might be true, there's nothing overtly fantastic. But it's absurd, zany; we aren't meant to wonder how likely a secret postal service is, but rather to be enticed into a delicious cognitive dissonance. Like The Specialist's Hat, Crying of Lot 49 made my own actual world feel temporarily unreal, unmoored - without any ghosts or transformations or anything.
I'm not attached to these axes as the best way to describe all literature. They are, sort of, how I tend to think of my range, though. Most everything I write is fantastic; but how irreal it is varies from "profoundly so" (The Orange, Red Leather Tassels) to "not at all" (Start the Clock, Embracing-the-New) to "right in the middle" (Biographical Notes).
If I have to be associated with a marketing label, I'm fine with "spec fic" or "SF" or "weird fiction"; or, sometimes, "surrealist fiction" or even "postmodernism". Like Jed, I'm happier with "irreal" than surreal, because I think it's broader, but I don't expect to find it at the top of a bookshelf any time soon.
I don't think I'm entirely succumbing to the lure of content-based definitions; the fantastic, here, is a reader taste. Both the fantastic and the irreal provoke a taste: the taste for being swept away from the ordinary. The fantastic is centered on events, the irreal on the context in which, and means by which, events are understood. Maybe?
David, I'd love to hear your positive proposal. Should we distinguish between the mode of "Five Irrational Histories" and that of "Fetch"? How? Is that not the most important distinction to be made, or not the one you find useful in your own practice? Then what is?