Trivia: The faun is not actually Pan. The film's correct title translated into English is 'The Labyrinth of the Faun'. However, the director, Guillermo del Toro, thought that the English-speaking audiences would get confused between a 'faun' (mythological creature) and a 'fawn' (baby deer). Therefore, for all English-speaking countries, the title is 'Pan's Labyrinth'.
Trivia: In a recent interview del Toro said that he tried to create subtle parallels between the "real world" and the fantasy world. One example of this is in the scene where Captain Vidal's dinner guests arrive in the rainstorm; the umbrellas they use are very similar to the heaving black flesh of the Giant Toad.
Trivia: Director Guillermo del Toro originally had the fairies from this film designed for a short sequence in his film Hellboy. Modified versions of the fairies are still visible in the Director's Cut DVD, where they can be seen pickled in a jar, though they appear somewhat different. Del Toro later used the exact same fairies from Pan's Labyrinth in Hellboy II: The Golden Army, during the Troll Market scene.
Answer: Evidence from the film:1) The image of a ram appears frequently in the house, including over the mother's bed and the twisted growth of the tree. An image such as this suggests that the fawn was created from common images.2) The first image is of the magical realm. The the following show Ofelia reading a fantasy book. This inidicates that the movie will be mostly from the point of view of a child who spends time developing her imagination. 3) The images of fascist, war-torn Spain are bleak aand desaturated while the images of the magical realm are bright. Even the monochromatic images of el Fauno are supersaturated. This filming technique suggests that Ofelia creates the fantasy.4) At the end of the movie, the General cannot see Ofelia talking to el Fauno. Therefore, at least for him, the kingdom is fantasy.The proof exists for both. The flower at the end of the film has been cited as evidence that the magical world certainly exists but only for those who choose to see it. This means that the kingdom is both real and not real - a paradox.