A boy discovers an ancient tree spirit in his local park.
An angel falls from Heaven for the love of a good woman.
Demons play Blackjack in the back room of a seedy bar.
Wizards walk unseen, casting spells to solve mysteries.
The Fae party hard at an illegal rave, and a young girl, out of her mind on Ecstasy, sees them for what they truly are.
The head of John the Baptist predicts winning lottery numbers for an old man in Catford.
All these are things that can appear in urban, or contemporary, fantasy. The basic idea (as I'm sure I've said before) is to explore the 'backstage' of our modern world and to paint in fantasies that make it richer and more compelling. Turn a corner, find something magic. This provides a wellspring of ideas and scenarios. Perhaps the local statuary can be asked for solutions to problems if you know how to invoke them. Perhaps your local park has gate to places unknown stashed in a copse of trees. Perhaps, perhaps, perhaps. This sort of jumping off point isn't just the source of any sort of fiction, for urban fantasists, it's the start of their odyssey recording the weird backstage world of where they live, We express things we would like to find hidden in the background, or that we find annoying, or even downright rage inducing and want to take headon.
There are two approaches to achieving this, which I'll call Generic and Specific. In a Generic Urban Fantasy, the road map to setting creation largely involves taking stock elements and sprinkling them into a real world location. This means that you get vampires in one part of town, werewolves in another, and so on. It might be argued that the most famous, if far from only, version of this is the Dresden Files series of books, where Jim Butcher has literally followed this pattern (ending up with something that feels too busy to me, but which other people enjoy). The advantage of this sort of world building is that the elements are universal and everyone will understand them - vampires in nightclubs is something that clicks, just as werewolves out in the less settled parts of town does. It is easy to grasp and it feels right, in the same way, that our protagonists being humans with magic powers, free of the disastrous needs and habits of the traditional monster, feels right. That's partly because it allows the hero to have a backstage pass to the supernatural world, they can get involved in anything that's weird and goes bump in the night that's out there, no matter who it involves. It's also, of course, because the reader is human, not a vampire so unless the story is about adjustment, about becoming a monster, the author wants to make sure their audience is comfortable and not conflicted about what's going on. Vampires may be sexy, but who wants to imagine themselves drinking blood, or turning hairy and savage under the full moon? (Okay, probably too many of you answered yes to that, and I sympathise, I'd love to be a werewolf, if it weren't for the beating my wardrobe would take).
The other thing, of course, is that the hero is usually cast into the role of detective; a side effect of that backstage pass and the investigative nature of the subgenre. This may stem from the fact that behind the fiction lies the roleplaying games created by White Wolf Games Studio (amongst others) in the 1990s. These were largely investigative and focused upon playing the monster but also involved dealing with societies that had grown up out of various groups of monsters meeting. So they were detective games as well as political games and in addition to being leavened with a good sprinkle of combat. In addition, they attracted a number of non-traditional gamers, in the form of women, LGBTQ players and others to the table, which almost certainly led to a knock on effect with regards to urban fantasy fiction.
The downsides of the Generic approach is that they make the worlds the same and that runs the risk of boredom. There's only so much you can do with the various monsters in the world, and unless you start reaching for weirder ones you're essentially tied to a set of beings who exist in very specific forms in the modern imagination (try selling a vampire who isn't vaguely Byronic and see how it goes). The style of story is great for setting up stories but at the same time, it means the characters are never normal people, which means they're perfect intercessors for us as readers but that they are essentially static, they're never going to have a real moment where the scales fall from their eyes and they're confronted with how weird the world actually is.
This is where the Specific model comes in - if Generic is Harry Dresden then we might say that Specific is Richard Richard Mayhew Dick from Neverwhere. Within a specific build, we may still find traditional monsters but they'll be less common and it's more likely that the takes on them will be more individualistic. Think Neverwhere's Velvets or the vampires from The Stress of Her Regard, rather than the off the peg vampire. Often Specific build settings are used for single novels, rather than for series, there isn't any need for the stories to feed into a larger world because they exist only for the duration of the novel. This doesn't mean that they don't have the depth and clarity that a series brings to the table, only that the author isn't expecting to return to them (which is good and bad). So, the Floating Market in London Below is as iconic as the bar in the Dresden Files, or Mahogany Row in the Laundry Files for that matter.
What strikes me, often, is that Specific urban fantasy is tailored to the places it features - you couldn't uproot Neverwhere and put it somewhere else, in Paris or New York you would have to re-tailor it to fit those cities and in doing so create something specific again. Tim Powers' work often wouldn't work anywhere but in the places he puts it and I wonder if there's a difference here in that the Specific creations are often designed to delve into one story, one aspect of humanity rather than being designed to be the detective story with some magic in. This would account for the difference in protagonists too, where the Generic protagonist is the detective, canny, wise, but an outsider, the Specific urban fantasy character is often an ingenue, pushed into situations, worlds, they don't understand by forces beyond their control. .Hence, Richard Mayhew falling through the cracks into London Below because of one act of kindness, or Janis Plumtree being dragged into a scheme to assassinate the Fisher King because of mental health issues. They may not return to the safety of the world they knew, a common feature of urban fantasy is that once exposed to the hidden world you can never go home again.
This focus on specificity makes these novels shine as they explore the nature of the places they're set in, rather than producing something that's smoothed down to simply be a vehicle for a narrative. To take Powers' Last Call for instance, the cards - and their symbolism - and dependence on luck are what made the novel not just urban fantasy but a Las Vegas urban fantasy story. The idea that gamblers had their own, specific kind of magic, added to this, in a way that the more generic nature of magic in long form series of novels does not.
Neither approach is better than the other, though Specific feels more 'literary' to me than Generic. I also do prefer it slightly, as I've grown tired of the idea that monsters can be dropped willy-nilly into settings with no thought as to character or consequence. I also prefer books that are slightly challenging to read (too easy and it gets boring) and often find the detective characters come across as unpleasant idiots rather than people I want to root for. Plus, I like things weird.