Of course, I admire The Lord of the Rings film trilogy for proving that fantasy films could be a viable commercial enterprise - and I'm still slavering over that Temeraire film we were promised: where IS it! - but for me, there are three films that embody fantasy in movie format. They're all older movies; I'd personally call all three of them classics. They are:
The Princess Bride: Let's start with the obvious one, shall we? I challenge you to find someone who doesn't love this movie, with its light-hearted but dramatic core, the wonderful humor, the quirky characters ... it's a lovely portrayal of a lot of traditional fantasy elements, princes, epic beauties, revenge quests, sword-fighting, pirates ... it's eminently quotable ("Life is pain, highness. Anyone who says differently is selling something.") and has really saturated our culture (quote from Civilation IV advice menu: "Never start a landwar in Asia."). Even if us modern gals are irritated by Buttercup's ineffectual flailings in the fireswamp - what a great adventure.
WIllow: This is the movie George Lucas wanted to make. That's my story and I'm sticking with it. There really is an unconfirmed story, though, that Lucas had written the script to Willow first ... but current technology couldn't handle the shapeshifting effects for Fin Raziel (really amazing cutting-edge effects for when it was made, folks), and so he wrote Star Wars instead. Hence the similar elements ... but this is really an archetypal adventure story, of an unassuming man swept up in events larger than himself. As to the rest, Madmartigan is an amazing character. The brownies are probably the least annoying of Lucas' sidekick concoctions. And the quotes ... okay, they're not as mainstream. But come on ... "'I dwell in darkness without you,' and it went away?"
Ladyhawke: This is probably the most obscure of the three films. The box and promo text claims that this is based off a genuine Welsh legend. It isn't, but it's easy to see why such a statement would have endured even after the real author sued. Its flaw is that it's too perfect: the illustration of traditional Celtic myth is too complete, too precise, the story too well-rounded to be an organic rather than a composed thing. (I actually did an essay on this film, so uh - pardon the ranting there.) Again, it's a beautiful blend of timeless fantasy archetype with emotion and - yes - humor. This remains my enduring image of Matthew Broderick. Yes, to me, who cares about Ferris Bueller? Broderick will always be Phillipe the Mouse. "I expect to see you at the Pearly Gates, my son, don't you dare disappoint me!" "I'll be there, Father ... even if I have to pick the lock."