Thanks, this is very helpful.Before I go into the other part of the question, let's start with genre definition.
Where will the story sit so that readers find it? If they're looking for a book, will they scroll through every new book (maybe find out how many new books are published each day), get past the title and cover to read the blurb, and then be interested enough to move onto reading the preview?
This is why a genre/category is important - the reader needs to know where to find a book just like the one they want to read (and if yours fits the bill, there it is in that category, genre, subgenre, etc.).
I don't think I can speak to the other part of the question, sorry, but I think it's important to find where it fits in the world of reading material so people can find it when that's what they're looking for. Maybe magic realism (but that does have specific expectations of form and context).