Etymology
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fancy (n.)

mid-15c., fantsy "inclination, liking," contraction of fantasy. It took the older and longer word's sense of "inclination, whim, desire." Meaning "the productive imagination" is from 1580s. That of "a fanciful image or conception" is from 1660s. Meaning "fans of an amusement or sport, collectively" is attested by 1735, especially (though not originally) of the prize ring. The adjective is recorded from 1751 in the sense "fine, elegant, ornamental" (opposed to plain); later as "involving fancy, of a fanciful nature" (1800). Fancy man attested by 1811.

fancy (v.)

"take a liking to," 1540s, a contraction of fantasien "to fantasize (about)," from fantasy (n.). Meaning "imagine" is from 1550s. Related: Fancied; fancies; fancying. Colloquial use in fancy that, etc. is recorded by 1813.

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Definitions of fancy
1
fancy (n.)
something many people believe that is false;
Synonyms: illusion / fantasy / phantasy
fancy (n.)
imagination or fantasy; held by Coleridge to be more casual and superficial than true imagination;
never had the wildest flights of fancy imagined such magnificence
fancy (n.)
a predisposition to like something;
she had dismissed him quite brutally, relegating him to the status of a passing fancy, or less
Synonyms: fondness / partiality
2
fancy (v.)
imagine; conceive of; see in one's mind;
fancy (v.)
have a fancy or particular liking or desire for;
Synonyms: go for / take to
3
fancy (adj.)
not plain; decorative or ornamented;
fancy handwriting
fancy clothes
From wordnet.princeton.edu