There are really two types of historical fiction.
First there are those that take the life of a real historical figure and write that person's story. In these types of novels most of the characters and happenings are based on real events. They are called fiction because their stories are fleshed out, the odd fictional character might make an experience and sometimes events are either created or moved in time to suit the story. These novels take an enormous amount of research and are both entertaining and enlightening.
When I think of these types of historical works, Sharon Penman comes to mind. I first came across her in the mid 1980s when I read her first book, The 'Sunne In Splendour.' A huge tome telling the life of England's Richard the Third. Her latest novel, 'Devil's Brood' is the third in a trilogy about Henry II and Eleanor of Aquitaine. She remains one of my favourite authors. Her characters leap off the page and she re-creates perfectly the world in which they live.
Alison Weir is another author who re-creates the past with heart felt precision. 'Innocent Traitor', her first fictional book (she is an historian with many excellent non-fiction works to her name), tells the tragic story of Lady Jane Grey.
The other type of historical fiction is what I write. My characters are pure imagination and their stories are fabricated. However, they live in a definite era in time, wear the clothes of that period and live amongst the technology of that age.
However, when my characters move away from this fictional pocket, they encounter real places: Cheyenne with its surprisingly modern electric street lights and telephones, San Francisco with its trams and steam ships.
I'm enjoying creating this fictional world and populating it with my made up people, but I'm glad that I can anchor it to a real period in time and a place that exists.