An allegory describes a story that has both a literal meaning and a second level of meaning. This second level of meaning may be political or historical, with characters representing important historical personages, or it may be more conceptual, with character embodying certain ideas or principles. For instance in John Milton's "Paradise Lost," the character of Satan has two children named Sin and Death who serve as embodiments of the principles of their namesakes.
A fable represents a type of allegory, often illustrating a moral through the use of animal characters. Aesop's Fables are examples of this genre. For instance, in "The Tortoise and the Hare," a hare makes fun of a tortoise for being slow. But, when the two race, the hare thinks he is so fast that he can afford to take a break. The tortoise, who maintains a regular pace, wins. The moral of the story is "slow and steady wins the race."
A satire is a work of literature that derides a particular subject. Because it often derides its subject by evoking laughter from an audience, satire represents a type of comedy. For instance, Oscar Wilde's play "The Importance of Being Earnest" satirizes the British Victorian upper classes, deriding their manners and morals. Many of the plays of George Bernard Shaw also satirize the British upper classes.
Allegory, Fable and Satire
A single work can combine elements of an allegory, fable and satire. For example, the novel Animal Farm" by George Orwell is full of farm animal characters who represent Russian historical figures. The novel satirizes Communist ideas through the events and actions that the animals engage in on the farm. The story works as an allegory. On one level it is about animals living on a farm but, on another level, it is about the history of Russian Communism. The animal characters who possess human qualities make the story a fable and the novel's use of exaggeration and ridicule make it a satire.