To a degree, literary taste is a subjective matter. One can admire a work of fiction without particularly enjoying it; one can dislike a novel even while appreciating its value. In the case of Erin Morgenstern's first novel, The Night Circus, I might well have been the wrong reviewer. As a reader, I am resistant to historical fiction. I am hostile to whimsy, and beyond impatient with the fantastical. I abhor feeling trapped in someone else's crazy imagination: Alice in Wonderland has always horrified me; I find the film Brazil unbearable. I've abandoned many novels because their premises struck me as preposterous. And if a book feels to me like a film in the making, I am doubly averse to it, feeling strongly that literature needs to reveal the world in ways that film cannot.

The Night Circus is a sprawling historical novel about magic and the circus. Highly whimsical, it is a narrative so wilfully contrived that contrivance is its raison d'être. It is intensely visual, so much so that what remains in its wake are almost exclusively images  more so than plot, or character, or even the prose itself. Morgenstern paints precise, evocative and visually lush scenes within the tents of her fictional circus. Reading the novel is, in this respect, more like watching a film in the making  not an ordinary film, however, but an imaginative collaboration between writer and reader.

I am a reader who should have hated this novel; yet I found it enchanting, and affecting, too, in spite of its sentimental ending. Morgenstern's patient, lucid construction of her circus  of its creators and performers and followers  makes for a world of illusion more real than that of many a realist fiction. There is a matter-of-factness about the magicians' magic, a consistency about the parameters of the circus world, that succeeds both in itself and as a comment upon the need for and nature of illusion in general. While the novel's occasional philosophical gestures seem glib ("You are no longer quite certain which side of the fence is the dream"), the book enacts its worldview more satisfyingly than could any summary or statement. Rather than forcing its readers to be prisoners in someone else's imagination, Morgenstern's imaginary circus invites readers to join in an exploration of the possible.

The novel's plot is fairly straightforward: two magicians of indefinite but certainly magically long lifespan  one a public performer named Prospero the Enchanter, aka Hector Bowen; the other known only as "the man in the grey suit" or "Mr. A. H---"  are engaged in a profound rivalry, played out over many generations by appointed pupils. In the late 19th century, Bowen elects his six-year-old daughter Celia, while his counterpart chooses a nameless nine-year-old orphan who will be called Marco Alisdair. These two are bound into a lifelong challenge, the parameters of which are never fully explained to them; and for years they do not know their adversaries.

The circus, known both as the Night Circus and Le Cirque des Rêves, is the brainchild of a theatrical producer named M Chandresh Christophe Lefèvre, at the subtle bidding of Mr. A. H---; but it is also the creation of Marco and Celia, both of who, over the years, become passionately embroiled in its performances and acts, as well as, inevitably, with each other. Their prescribed competition becomes a mutual test of love. Whether they will destroy each other and the circus into the bargain, or whether they can escape their magical indentured servitude and rewrite their fates, emerges as the novel's central question. The stakes are high, and yet it is not particularly for the passion between Marco and Celia that this reader kept turning the pages.

Rather, I was compelled by the world itself  by its saturated colours and textures, its unexpected smells and tastes. It is  a surprisingly rare thing in fiction  a strikingly beautiful world, in spite of its darknesses. Around her protagonists, Morgenstern assembles a cast of intriguing eccentrics, including Herr Friedrick Thiessen, the clockmaker and chief circus groupie, Tsukiko the contortionist, and Poppet and Widget, the red-haired twins born on the circus's opening night. Through the movements of her characters in this sparklingly realised alternative reality, Morgenstern explores the relation between competition and collaboration, collusion and manipulation, fate and freedom. The Night Circus poses questions about the essential connection between fantasy and reality, and the human need for the former for the sustenance of the latter.

Above all, the novel is a genuine pleasure to read. Like any successful illusion, it could be carefully unravelled; but surely, as rare as it is, it should simply be enjoyed.

Claire Messud's The Emperor's Children is published by Picador.

In terms of the book as object, this must be one of the most beautiful novels of the year. Its die-cut cover, black-edged pages and intricate endpapers attest to the publisher's hopes that Erin Morgenstern's magically minded debut will secure the vast audience left bereft by the conclusion of the Harry Potter chronicles. If fantasy novels rest on an ability to build rather than populate a world, they might just be in luck.

The Night Circus is a strange beast, creakily plotted but boasting a fabulously intricate mise en scène. At its centre is the appropriately named Le Cirque de Rêves, a dreamlike travelling circus in the latter part of a baggily imagined 19th century. It arrives without warning in fields around the world, opening its gates between the hours of dusk and dawn. Once inside this monochromatic world, audiences might watch a tattooed contortionist fold herself into a tiny glass box, feast on chocolate mice and caramel popcorn, or wander through a sequence of tents that includes an ice garden, a desert and a maze constructed from towering clouds.

What few realise is that the circus is the result of a bizarre competition between two rival magicians, Prospero the Enchanter (also known as Hector Bowen) and Mr A H, a man of such formidable mystery that no one can quite remember his name. While Prospero believes magic is a matter of innate talent, Mr A H thinks it can be taught to anyone of reasonable intelligence. Periodically, they like to set their respective students up in contests known portentously as "the game", though anyone hoping for a rulebook or score sheet will be disappointed. The circus, created by magically manipulating a theatre impresario, serves as the duelling ground for the latest pair of students, Marco the orphan and Prospero's beautiful daughter, Celia, whose training includes regularly having her fingertips slashed in order to learn how to mend broken objects.

While even the best fantasy novels don't sound particularly convincing in precis ("and then the hobbit had to escape from a giant spider"), Morgenstern's strength evidently doesn't lie in her ability to construct a narrative. The mystery surrounding the game is never adequately resolved and the tensions that are so neatly drawn in the opening chapters drain abruptly away towards the end. A subplot involving a small boy in Massachusetts has the air of an afterthought: an attempt to propel what is essentially a static or revolving story.

Aside from a vague nod at costume, there's no real sense that an authentic world, either historical or counterfactual, exists outside the circus gates, and though this increases the intensity it also leaves the book feeling oddly unmoored (Susanna Clarke's Jonathan Strange and Mr Norrell, which seems to have served as something of a blueprint, didn't make this mistake, being deeply embedded in the same period). Nor do the characters exactly come to life, though they certainly function as visually alluring automata, with their ink-splashed dresses and shocks of red hair.

Circuses often attract novelists as transgressive spaces, the carnival under canvas, where all manner of misrule might take place. One only has to glance at Angela Carter to see the sort of grubby, seductive bawdiness that might explode from a contained world of greasepaint and sawdust. Unfortunately, Morgenstern's aesthetic is a little too cutesy to be properly carnivalesque. There's an excess of kittens and while food is richly imagined, it's so densely sugary as to recall the hyperglycaemic fantasies of Enid Blyton, who wrote not only for children but also during rationing. As for sex, though the relationship between the students quickly veers into a love affair, physical passion is clunkily imagined ("the meticulously constructed gown collapses in a puddle around her feet"), in contrast to the lovers' rapturous pleasure in building illusions for each other (a wishing tree, a sunken rose garden, a pool of tears into which sorrows might be tossed like stones).

It's this pleasure in imagining near-impossible objects that marks The Night Circus out. One of the side characters, a German clockmaker, is commissioned to produce a marvellous black-and-white clock to hang above the circus entrance. "The body of the clock, which has been methodically turning itself inside out and expanding, is now entirely subtle shades of white and grey. And it is not just pieces, it is figures and objects, perfectly carved flowers and planets and tiny books with actual paper pages that turn." There is an appealing zest to this and the many other wonders that Morgenstern has created, and if her book isn't entirely satisfactory in the ways one might expect, it still functions as an eminently intriguing cabinet of curiosities.

Olivia Laing's To the River is published by Canongate