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First of all, Animal Farm has talking animals and these animals usually have other human qualities. In fact, they are portrayed as if they were human or as if the events they go through would be analogously applicable to human beings. These are characterisitcs of fairy tales. It is a fable version of the Russian Revolution. It is also a cautionary tale for any country.
At first, fairy tales were written for adults as much as they were written for children. The intended audience for Animal Farm was adults but its general lesson is clear enough that children can understand it.
Many fairy tales have morals or some lesson guiding the narrative. This is also the case with Animal Farm. The animal revolution begins with good intentions but Napoleon and his cohorts become corrupt with power and end up literally and morally resembling the system of tyrants they overthrew. So, this is one fairy tale that does not have a “fairy tale ending.” (But fairy tales do not have to have happy endings.)
Pan’s Labyrinth is a contemporary example that incorporates magic, talking animals (mythical creatures) into an allegory of Spain in the years following the Spanish Civil War. Like Animal Farm, this film combines fairy tale elements with cultural and historical events.
Animal characters in fairy tales often embody one or a few human traits. Napoleon symbolizes greed. Snowball is the intellectual. Boxer represents loyalty and the "working class" in the allusion to the Russian Revolution.
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