- The work focuses on one or more characters.
- The action is arranged into a plot.
- The story involves a conflict.
It isn't exclusive to fiction, but fiction writing has characters.
A plot is made of events that are given in a particular sequence. Again, it's not exclusive, but you need to have events to have a story.
Conflict is the thing the character overcomes. It can be external (a knight vs a dragon, for instance) or internal (a character overcoming feelings of shame from childhood trauma, perhaps).
What it isn't:
Fiction can certainly end unhappily (I would say that Great Expectations does not end happily, for example).
Events happening in real-life make the story non-fiction.
