fairytale vs fairy tale

fairytale and fairy tale both are nouns.

Word	Noun	Adjective	Verb	Adverb
fairytale	Yes	No	No	No
fairy tale	Yes	No	No	No

As nouns, fairytale and fairy tale are synonyms defined as:

Other synonyms of fairytale include fairy story.

As nouns, fairytale and fairy tale are synonyms defined as:

fairytale and fairy tale: an interesting but highly implausible story; often told as an excuse

Other synonyms of fairytale include cock-and-bull story, fairy story, song and dance.

fairytale (noun)	fairy tale (noun)
a story about fairies; told to amuse children	a story about fairies; told to amuse children
an interesting but highly implausible story; often told as an excuse	an interesting but highly implausible story; often told as an excuse