Some argued that novels, still a relatively new form, should represent real life and the problems we humans face. Others argued that the worlds depicted in novels should be as fictional as possible, and that the plots should have no underlying meaning.
Some, like critics Reeve and Scott, also believed that the novel could "corrupt weaker minds:"
"They both believed that fiction should be moral and didactic in order to avoid the danger of corrupting weaker minds, such as those of women and children, who may struggle to distinguish between reality and the powerful illusion created by the authentic dialogue and characterization of realism" (LiteraryFocus).
There was also debate about the "rules" that fiction should follow. It should have a specific format, in other words.
Finally, there were many that felt writers could only write from their own experience. Characters who, for example, were of a lower class, could not easily imagine what it was to be part of an upper class, as they had not been a part of that. The same went for writers. If a writer was a woman, for example, many felt she might not be able to write realistically from the standpoint of a man. James would later argue against this with his "house of fiction" analogy, which "emphasized the importance of individual imagination" (LiteraryFocus).
James disagreed that novels needed a specific format. Instead, he felt they simply needed to be "good."
He also felt that the novel had the ability to capture history in much the same way as historians and painters.
In other words, novels were capturing reality, and in a powerful way because they were capturing truth, even if some parts were fictionalized (just like painting capture real life, although with some artistic elements added).
He also felt that one need not have experienced a certain thing to write about it. For example, one did not have to be part of a social class to write about that social class.
This book was written primarily for and about women, and it is not a romance, which many novels with that audience in mind typically were. Instead, Eliot plays with all sorts of rules that were part of the "debates." How interesting is it, though, that this is written for women by a woman under the pen name of a man? Because of the audience, it challenges the notion that "weaker minds" cannot distinguish between fiction and real-life.
He then represents true life in his book and characters. These are not overly fictionalized.
The book has multiple underlying messages about marriage and politics, just to name a couple.
"Plots develop simultaneously among characters of various social levels" (eNotes), supporting James's arguments that writers and characters can and should move between their own experiences and those they can imagine.
Ultimately, Middlemarch is a wonderful representation of what James was arguing fiction should be.