For many users of the term, however, the current state of knowledge about the world is irrelevant. For them, "science fantasy" is either a science fiction story (however understood) that has drifted far enough from reality to "feel" like a fantasy, or a fantasy story that is attempting to be science fiction.
While these are in theory classifiable as different approaches, and thus different genres (fantastic science fiction vs. scientific fantasy), the end products are sometimes indistinguishable.
Clarke's dictum that "any sufficiently advanced technology is
indistinguishable from magic" indicates why this is so: a writer can write
a fantasy using magic of various sorts, and yet turn the story into
science fiction by positing some highly advanced technology, or
as-yet-unknown but ultimately thoroughly provable science, as an
explanation for how the magic can occur. Another writer can describe a
future world where technologies are so advanced to be invisible, and the
effects produced would be classified as magical if they were only
described as such. A world might include magic which only some people (or
only the reader) know to be in fact technological effects.
There is therefore nothing intrinsic about the effects described in a given story that will tell you whether it is science fiction or fantasy. The classification of an effect as "fantastic" or "science fictional" is a matter of convention. Hyperspace, time machines and scientists are conventions of science fiction; flying carpets, magical amulets and wizards are tropes of fantasy. This is an accident of the historical development of the genre. In some cases they have overlapped: teleportation by matter-transmitter-beam is science fiction, teleportation by incantation is fantasy. A hand-held cloaking device that confers invisibility is science fiction; a hand-held Ring of Power that confers invisibility is fantasy. Mind-to-mind communication can be "psionics", or it can be an ancient elvish art. What matters is not the effect itself (generally scientifically impossible, though not always believed to be so by the authors) but the wider universe it is intended to evoke. If it is one of space travel and proton-pistols, it gets classified as "science fiction", and the appropriate terms (cloaking device, matter-transmitter) are used; if it is one of castles, sailing ships and swords, it gets classified as "fantasy", and we instead speak of magic rings and travel by enchantment.
Drawing the line between science fiction and fantasy is not made any clearer by the fact that both of them can use invented worlds, non-human intelligent creatures (sometimes, in sf as well as fantasy, based on myth: consider C. L. Moore's Shambleau and Yvala), and amazing monsters. It is, to a large extent, authorial fiat that tells us that C.S. Lewis' Narnia books are set in a fantasy world rather than on another planet, or that Anne McCaffrey's early Pern books are extraterrestrial, and that her "dragons" are not actually dragons.
Even archaism, one of the strongest conventional marks of fantasy, is not an infallible distinguishing characteristic: an archaic world of edged weapons and battlemented fortresses could simply be another planet that has slid back into barbarism, or has never emerged from it. Some of Marion Zimmer Bradley's Darkover books represent just such a world, complete with technology-indistinguishable-from-magic. (It is this, as much as the "dragons", that leads some readers to perceive McCaffrey's Pern series as fantasy, in spite of the science-fictional setting established in the first paragraphs of the first book.)
The label first came into wide use after many science fantasy stories were published in the pulp magazines, such as Robert A. Heinlein's Magic, Inc. and L. Ron Hubbard's Slaves of Sleep. Fletcher Pratt and L. Sprague de Camp produced the Harold Shea series. All were relatively rationalistic stories published in John W. Campbell, Jr.'s Unknown Magazine. These were a deliberate attempt to apply the techniques and attitudes of Science Fiction to traditional fantasy and legendary subjects. The Magazine of Fantasy and Science Fiction published, among other things, all but the last of the Operation series, by Poul Anderson.
Henry Kuttner and C. L. Moore published novels in Startling Stories, alone and together, which were also very good and far more romantic. These were closely related to the work that they and others were doing for outlets like Weird Tales, such as Moore's Northwest Smith stories cited above.
Early science fiction book publisher Gnome Press published Robert E. Howard's Conan the Conqueror in hardback in 1950 with the book clearly labeled 'science fantasy' on the dustjacket.
Ace Books published a number of books as Science Fantasy during the 1950's and '60s. Many of them, such as Leigh Brackett's Mars stories, are still regarded as such. Conan the Conqueror was published as an Ace Double with Brackett's Sword of Rhiannon. Others, such as Andre Norton's Witch World books, are now considered outright fantasy. Mercedes Lackey has discussed this period in her recent introduction to an omnibus edition of the first three Witch World books. In the U.S. at that time, these were almost the only stories which used that label.