Sorry, it took us a while to find a midget who knew the answer:
So for the longest time -- there have been two camps in the publishing world:
The literary fiction, historical fiction, commercial fiction, women's fiction camp.
And the mainstream fiction, genre fiction, romance/thriller/mystery/sci-fi/fantasy camp.
Depending on which author, agent, editor with, you will likely find one camp sneering at the other.
It's silly and juvenile, but there you have it.
You will not find an agent who says that they want to represent say...genre fiction as well as commercial fiction. And if you do -- in our experience-- they are new and misusing the term "commercial fiction". And in fact, it is the same reason why many agents that rep literary and commercial fiction also go on to quality that they do NOT represent genre fiction like romance, fantasy, mystery, etc.
Commercial fiction sprang out of literary fiction or historical fiction that gained popularity (many times because it got turned into a movie) because it had more plot than most literary fiction, and suddenly became "mainstream" -- both in popularity and earnings potential. Slowly, a new genre of fiction developed that had literary prose but also a well-paced plot and actually sold -- in big numbers. You couldn't call it literary fiction because it wasn't literary fiction exactly -- it was more commercial. But it certainly wasn't genre fiction either.
Women's fiction sprang out of commercial fiction when the marketers realized that women were a huge portion of the fiction reading population, and they started pushing books with "elevated" writing that had a well-paced plot AND a female main character and a female sensibility.
But technically, these genres were never considered "mainstream fiction" because genre writers and genre agents had long used that the term "mainstream fiction" to describe their camp, which includes your well-defined, formulatic genre fiction categories like romance, thriller, mystery, fantasy, etc. and which do not place the eminent quality of its prose as a measure of its worth.
And we would like to say that The Midget completely disagrees with the Writers Digest's explanation of literary fiction vs. commercial as well as their explanation of mainstream fiction. They've got it backwards, and that's not helpful, but also not surprising. And John Updike and Joyce Carol Oats are solidly in the literary fiction camp. They just happen to be well-known.
The bottom-line: If you say that you write commercial fiction, you are no longer part of the genre fiction camp. You need to know this and be aware of this when you are networking with aspiring writers/published authors as well as querying agents because they will expect the quality of your prose and the overall concept of your book to match a more "literary" style. But they will also expect it to be popular in terms of sales numbers.