I think LeGuin's argument about the definition of fantasy comes partially from the fact that in literature the distinguishing features of "high fantasy" vs "low fantasy" is that high fantasy is fantasy with a second world and low fantasy is fantasy without a second world. Whereas in role-playing we tend to use these terms to describe the amount of magic in a setting or how different from our own world the setting is. Add to that the fact that we routinely qualify non-medieval fantasy as "urban fantasy" or "space fantasy" which indicates that we do not consider these other genres as "fantasy" as LeGuin defines it.
I think LeGuin's argument about the definition of fantasy comes partially from the fact that in literature the distinguishing features of "high fantasy" vs "low fantasy" is that high fantasy is fantasy with a second world and low fantasy is fantasy without a second world. Whereas in role-playing we tend to use these terms to describe the amount of magic in a setting or how different from our own world the setting is. Add to that the fact that we routinely qualify non-medieval fantasy as "urban fantasy" or "space fantasy" which indicates that we do not consider these other genres as "fantasy" as LeGuin defines it.