I usually see it written as two words, without the hyphen: fairy tales.

Fairy tale is compound noun, made up of two separate nouns. As is always the case with compound nouns, the first is singular and invariable, while the second behaves as a 'normal' noun, and can be plural if necessary. For example, 'This is a book of traditional fairy tales'. It can sometimes be one word or hyphenated when used as an adjective e.g. 'a fairytale castle' or 'a fairytale romance.'