What Gaiman alludes to and Chabon tackles directly is the genre which we now know as "literary": the fictional worlds inhabited by people who think a lot and say a lot and feel a lot, but don't actually do very much over the course of the narrative - they might be caught up in the swell of an emotional riptide, perhaps, until Chabon's "moment-of-truth" revelation brings the story, such as it is, to a close.
The ongoing, endless war between "literary" fiction and "genre" fiction has well-defined lines in the sand. Genre's foot soldiers think that literary fiction is a collection of meaningless but prettily drawn pictures of the human condition. The literary guard consider genre fiction to be crass, commercial, whizz-bang potboilers. Or so it goes.
Maybe my tastes are overly simple, but if there really is a war between genre and literary fiction then, on balance, I'm with Neil Gaiman: while I want the technical accomplishment of a well laid-out meal, I also want to feel stuffed and satisfied afterwards. Good writing? Of course. Story? Why else bother writing, or reading?
Of course, the real problem with this war between literary and genre, is that it's stupid.
The divide between the two is based on a misconception of story. A story may indeed involve finding the forgotten key for a box that may unlock miniature dinosaurs. Or it may involve simply walking down a path. Both have narratives that begin, which rise, crest, and end in a moment of truth, to use the term that was nicked from Chabon's introduction to the very uninspiring McSweeney's. Be it the story about the miniature dinosaurs that can talk and offer car repair advice, or the man who checks the mail for the one letter he receives once a month, both stories require the reader to invest into the character and the events that are transpiring, be they internal or external events.
The problem with this argument is that it values one kind of story over the other. You'll not I'm not talking about the quality of writing, because good quality writing is always desired, though this comes in many forms as well--but just as there is good genre writing and good literary writing, there's shit on both sides. You'll all be able to name your favourites and hates on that, so I'll leave you to it, except to say anyone who lists Frank Herbert's Dune as an example of good genre writing is just wrong. But, as I was saying, this debate that exists is one that is based on putting a false value on a type of narrative, and claiming that either of them is somehow more fulfilling than the other, or that they function fundamentally different from the other.