Wainscot fantasy is a setting trope in which fantasy elements are hidden just below the surface of an otherwise mundane world1. This is fairly typical for modern urban fantasy, and even more so for horror, but can equally well be applied to pre-modern and sci-fi settings as well.
In general, these settings require any fantastic elements to be subtle and discrete; whilst bland rationalisation and masquerade may help to some degree, the flashier elements of true fantasy tend to strain credibility to unacceptable levels.
The prevalance of fantasy elements isn't necessarily reduced by this trope - for those who can see them, there may be otherwordly beings on every street corner and a goblin market under every manhole … or supernatural beings may be extant but rare, their existence known only to a few fringe scholars and other esoterics. Access may also be an issue - you may need to be in the wrong place at the wrong time to slip through a gate to fairyland, or you may just need to walk into the wrong cellar bar. Of course, if the supernatural is common and easily accessed, you'll need to explain how it remains "behind the wainscot" and hasn't been mainstreamed.
Game and Story Use
- This is probably the easiest way to incorporate magical elements into a modern campaign.