Many reviewers and publishers use the term "urban fantasy" (UF) to describe a book set in our recognizable, modern world if it has any amount of fantasy elements inserted in the story. I personally don't consider that a book merits the descriptor, UF, unless there is an extensive amount of magical world-building. In most books that I consider true UF, a magical universe exists side-by-side with the normal, modern world. The story's magical creatures purposely keep their world, in varying degrees, hidden from ordinary humans in order to avoid constant battles with frightened, angry mortals. In such stories, humans also consciously and unconsciously collude to keep the existence of the magical creatures secret in this manner: When magical events impinge on the mundane world, if the humans directly involved don't refuse, on their own, to believe anything magical could possibly have happened to them, authority figures such as police, spy agencies, the military, and politicians intervene. They use lies and, if necessary, force, to cover-up magic's existence, their standard excuse being, "to avoid chaos."
In UF, two crucial sources of conflict occur in virtually every story, secrets and lies. These are, of course, staples in every genre of fiction, but they have these unique twists in UF:
(1) The protagonist carelessly, or because she/he has no other choice to protect others from harm, displays magic in front of humans and gets into major trouble for it with magical-world authority figures, as in Hex Hall by Rachel Hawkins. (2) The protagonist is forced to deal with the fallout of magical villains carelessly or purposefully causing damage to humans with their magic, which occurs throughout the Harry Potter series. (3) The protagonist is either part of or closely connected to a species of magical creatures who have recently "come out of the closet," allowing humans to know that they exist. The magical creatures are struggling to construct a détente with humans in the midst of many humans trying to wipe them off the face of the planet. Famous non-YA examples of this are the Sookie Stackhouse series by Charlaine Harris and Patricia Briggs's Mercy Thompson series. (4) In UF stories which focus almost entirely on magical beings, with the only non-magical humans existing as relatives, friends, or employers of magical creatures, the main focus in the story is often a power struggle between warring factions within the magical world. Examples of this include the Dresden Files by Jim Butcher in adult UF, and in YA UF such series as Mortal Instruments by Cassandra Clare, Raised by Wolves by Jennifer Lynn Barnes, the Svatura by Abigail Owen, and the Witch duology by Carolyn MacCullough.
The tone of UF is usually dark, and if they start out funny, they usually end up grim, as does the Hex Hall series mentioned above. One rare example of a YA UF that is comic in tone throughout is Oh. My. Gods. by Tera Lynn Childs.
When a story is set in our recognizable, modern world but magic intrudes in a limited way, reviewers and publishers often use the generic labels "paranormal" or "fantasy" to describe them rather than UF. By limited magic I mean that there is only one type of magic in the book. For example, the heroine sees one or more ghosts (Drawing the Ocean by Carolyn MacCullough), or she encounters something or someone magical which/who grants her wishes (Wish by Alexandra Bullen, My Fair Godmother by Janette Rallison, Coffeehouse Angel by Suzanne Selfors, As You Wish by Jackson Pearce), or she gets struck by lightning and now has a magical power she did not have before (1-800-Where-R-You by Meg Cabot, and the adult Harper Connelly series by Charlaine Harris). All of these examples are set in the recognizable present and, thus, each is a "contemporary paranormal/fantasy."
When a paranormal/fantasy is set in any period of the recognizable, historical past other than medieval times (the classic setting for "sword and sorcery" and "epic" fantasy), it is a "historical paranormal/fantasy"--except when the magic involves an a-historical form of technology. In that case, the term most often used to describe it is "steampunk," for example, the YA series The Infernal Devices by Cassandra Clare. An example of a YA historical paranormal series is Poison Diaries by Maryrose Wood. An example of YA sword-and-sorcery is the Graceling Realm series by Kristin Cashore.
What I personally enjoy most in UF, along with great world building, is a protagonist who is committed and loyal in his/her personal relationships. I believe this quality is absolutely essential for a great UF book for this reason: In any kind of action/adventure story, which most UF is, the protagonist needs to be both sympathetic (a decent person), empathetic (taking actions which are well-motivated and relatable), and above all, active (vs. listless and passive). Something that accomplishes all three in one fell swoop is to make the protagonist a terrific best friend and/or loyal mate or family member who will stop at nothing to protect, defend and rescue people (or magical creatures) she/he cares about. In addition, this type of protagonist will never stand by and let a bully prey on someone weaker, and if the weaker one is a child, look out! The protagonist will "charge hell with a bucket of water," as the saying goes, in order to save that child from harm.
This kind of protagonist inevitably, as a UF series progresses, gains an ever-growing network of magically powerful friends who owe the protagonist big time for saving their lives. Often, the protagonist will call in those favors not for him/herself, but for someone else the protagonist cares deeply about whose life is in danger. This serves to create a continuing thread of never-ending, dramatic action and over time builds the protagonist's appeal—both to readers and characters within the books of the series—to near mythic stature as a noble, sympathetic hero.
Two adult UF authors who accomplish this hero requirement in spades are Jim Butcher in the Dresden Files and Patricia Briggs in her Mercy Thompson series and Alpha & Omega series. The YA Raised by Wolves series by Jennifer Lynn Barnes does a very good job of that as well.
Another segment of the science fiction/fantasy market is the dystopian. This is a subgenre of science fiction because of the way the world building is done. The UF world is filled with magical creatures. Dystopians are set in apocalyptic futures where the protagonist lives in a burned-out landscape littered with the dregs of advanced technology. The protagonist is resourceful and often employs a mixture of pre-industrial survivalist skills in combination with the ability to jury-rig remnants of advanced technology from the destroyed civilization of the past. An example of this is the YA dystopian Vulture's Wake by Kirsty Murray and, of course, the most famous YA dystopian series of all, The Hunger Games series by Suzanne Collins.
Though the dystopian world is different than that of UF, because dystopians, like UF, almost always have action/adventure plots, they have the same primary requirement for ultimate success as UF: a high-caliber protagonist as described above. I believe The Hunger Games series is a massive bestseller because the heroine is exactly that kind of protagonist.