not have a room of her own and had to write at a minuscule desk in a hallway, with a squeaky floorboard giving her the warning that she was likely to be interrupted. If she had included American slaves like Phillis Wheatley, she would have had to admit that a woman could become a celebrated poet without even owning herself.

The fictional element in the talk allows Woolf to include writers who would have been lost to history. Her point about Judith Shakespeare is that even if she had existed, we would not know anything about her. Any woman with the type of gifts Woolf ascribes to Shakespeare's sister (which is to say, similar gifts to those of Shakespeare himself) "would certainly have gone crazed, shot herself, or ended her days in some lonely cottage outside the village, half witch, half wizard, feared and mocked at." Any example of such an obscure and tragic genius must necessarily be fictional.

In A Room of One's Own, Woolf states,

Therefore I propose, making use of all the liberties and licenses of a novelist, to tell you the story of the two days that preceded my coming here—how, bowed down by the weight of the subject which you have laid upon my shoulders, I pondered it, and made it work in and out of my daily life.

Woolf gets more to the point when she writes about why she fictionalizes:

when a subject is highly controversial—and any question about sex is that—one cannot hope to tell the truth. One can only show how one came to hold whatever opinion one does hold.

She says quite plainly in the above quote that she wants to explain what thought processes underlie her convictions about women writers.

Since Woolf was trying to condense a large number of observations she had made over many years into one essay, it was important that she fictionalize so she could get to her point. Her point was that the material and personal disadvantages women suffered made it difficult for them to produce literature at the same rate and of the same quality as men. She wanted people to focus on that big-picture theme rather than haggle about factual details.

In addition, Woolf experienced anger over being denied the educational opportunities afforded her brothers and other men of her class. Fictionalizing her essay gave her some distance from it and helped her contain her outrage, which she didn't want to detract from her argument (although some does spill onto her pages). She was particularly unhappy that women's lack of literary output compared to men was attributed to women's mental inferiority when she knew that wasn't true.

I think that part of what makes Woolf's writing fascinating is her adoption of a slightly fictional, slightly non fictional point of view.  If she were to create an entirely non fictional piece, it would be more of a sociological study and would lack the imagination and creativity that the fiction aspect affords her.  One of her driving forces seems to be the desire to increase the moral imagination of the reader.  Her employment of fiction helps to do this.  At the same time, she is attempting to be consistent with the Modernist belief systems in seeking to construct a work that is not entirely in one vein.  The notion of multivocality in the approach to writing and creating literature is something that appealed to Modernists, who sought to define the genre in new and different manners.