The beginning of the Home Literature movement brought with it a moderation of the harsh rhetoric that condemned all fiction, in favor of a view that some fiction could be true when it described events that were typical or that reflected the way that people acted in reality, and when, of course, the work promoted the prevailing moral code. I included an excerpt from the Young Woman’s Journal that makes this point several months ago, but the following article from the Contributor is several years earlier. I’m not sure exactly when this view was introduced or who first made this claim, but whenever it was, it does mark a clear turning point in how Mormons perceived fiction.
But after making that observation, the author of this extract goes on to make some wonderful observations about the impact that fiction has on the reader.

For some reason I’ve always assumed that the Church’s adult magazine stopped carrying fiction and poetry with the big change from the Improvement Era, Relief Society Magazine and Instructor of 1970 to the Ensign of 1971. For at least a century before 1970 Church magazines had been the primary venue for fiction aimed at Mormons. And given that the Ensign I’ve been familiar with as an adult doesn’t have fiction or poetry, I have always assumed that it never did. [I wasn't really its target audience in 1971—I was 10.]