The best way to teach children the difference between nonfiction and fiction books is to provide examples of both types of books. By having them check out each book they can tell reality from make believe.
Using animals as the theme, if you took out several Berenstain Bears books, and read the stories to the children they could see how humor is used in each book. The silliness of the situations in which the bears find themselves is laughable, not realistic. To compare this book to a nonfiction type, find a science book about Polar Bears. Have the class follow along as you read aloud what a typical day is like for these bears. They will quickly note that the habitats are different...and real bears do not wear the comical clothes of the Berenstain family of bears.
Perhaps this is too simple a comparison, therefore take out one of the American Girl books. If you use the Felicity series you can discuss what it was like to live in the colonial days through the eyes of Felicity. Explain that the list of characters presented in the front of the book is to introduce the characters to you, the reader. The Merriman family is fictional, however, the stories are told during a specific time in our history which did exist.
To compare this book to a nonfiction book, present a history book explaining about the Boston Tea Party and about the rides of Paul Revere, and Sybil Ludington. When you discuss the writing of the Declaration of Independence, show the website of Monticello, Thomas Jefferson's home. You can take a virtual tour of his home and get a feel of what his surroundings were like during the period of the Revolutionary War.
To continue with this comparison of books, read The Kapok Tree to your class. Explain that the rain forests are truly being destroyed by people who want their kind of progress. However, in the story it is the animals who speak to the sleeping man and tell him to leave the animal homes alone and to stop destroying the forest. This book is fictional, but the loss of animal habitats is not. Present a nonfictional book with photographs of the animals in their homes. Also show the maps which indicate where these rain forests actually exist.
To better understand our need to protect the rain forest, present lists of foods and materials we need to help us survive which come from the rain forest. When they see that our medicine, chocolate, nuts, cleaning materials, and even furniture would be eliminated if we don't protect our rain forests, they will understand that it is an issue of reality and not make-believe.
I believe that the comparison of books would help explain the difference of nonfiction and fiction books.