Fairy tales are more than true… actually, the Chesterton essay that inspired that quote hits it better:
The modern novels stood before me, however, in a stack; and you can imagine their titles for yourself. There was “Suburban Sue: A Tale of Psychology,” and also “Psychological Sue: A Tale of Suburbia”; there was “Trixy: A Temperament,” and “Man-Hate: A Monochrome,” and all those nice things. I read them with real interest, but, curiously enough, I grew tired of them at last, and when I saw “Grimm’s Fairy Tales” lying accidentally on the table, I gave a cry of indecent joy. Here at least, here at last, one could find a little common sense. I opened the book, and my eyes fell on these splendid and satisfying words, “The Dragon’s Grandmother.” That at least was reasonable; that at least was true.