The term "moral realism" is normally (I think) used in contrast to "moral subjectivism". In this sense, moral realism is a view which holds that moral truths are objectively real and independent of any particular person's frame of mind, whereas moral subjectivism hangs the reality of morality on the contingencies of this or that person's understanding and context.
In this post I will be using "moral realism" in a different way, unrelated to the realism/subjectivism distinction, and instead derived from the use of the word "realism" in literary criticism, where it refers to narratives which attempt to portray personalities and events with the complexity and incongruities of ordinary life, instead of weaving worlds out of simplistic tropes or ideal types. (Note that the use of tropes and types is not necessarily bad, but makes for a different kind of fiction.)
Moral realism as I use it here has to do first of all with the way a narrative portrays the moral dimension of events and personalities (i.e. the aspects related to habits of decision making, right and justice, courage and perseverance, honesty, humility and self-control), and the way the portrayal of this moral dimension of things directs the viewer's understanding of their nature and significance. Specifically, moral realism is a characteristic of narratives which deal directly with that moral dimension of things, but in such a way that the reader or viewer is not directly given an abstract principle of behavior (whether through the use of contrived plots or narratorial comment), but allowed to see different habits, virtuous and vicious, at work in people, and to abstract for himself whatever moral principles he discovers in the narrative.
Moral realism is one of the things that has come to appeal to me a great deal in fiction, and it drives the approach that I've been taking in writing The Great War. As such, I'd like to draw on Milco's concept a bit and see if I can make some classifications.
At the opposite end of the spectrum from moral realism, we find stories focused around some sort of moral dualism. These are "What side are you on?" narratives in which the big moral action that a character takes is taking one of two sides in some sort of titanic struggle. This can be done in a fantastic context. Will Luke align with the Light Side or the Dark Side of the force? Do characters in Harry Potter align with the Death Eaters or with the Order of the Phoenix? However, these "pick sides" kind of dualities can also be non-fantastic. In the play "The Cradle Will Rock", moral choice is centered around whether to side with the labor organizers in Steeltown or with the greedy corporate interests. In Ken Follet's The Fall of Giants, characters tend to be tagged as good or bad based on how they align in relation to specific movements: Do they support the workers or the powerful? Do they support or oppose women's rights? However, not every story which involves two sides is necessarily of this moral dualism type. For instance, Lord of the Rings is often referred to as a "clash of good against evil" kind of narrative, and it is in that there are moral concerns writ large which drive the plot. However, it is not a "which side are you on" type of narrative, in that moral choice does not simply involve "Are you supporting Sauron or opposing him?" as shown by the fall of characters such as Boromir.
Another stop along the spectrum is the heroes and scoundrels structure. This is a narrative in which much of the conflict is driven by the conflict between good characters and bad characters, but in which moral choice is not actually a major factor in the storyline. An example of this which occurs to me right away is Bernard Cornwell's Sharpe novels. Although they center around the Napoleonic land campaigns, the treatment of the French and British sides is moderately even-handed. Although Sharpe is himself a highly effective soldier and fights hard for the British, it's stated repeatedly that if he had been born French he would have fought just as hard for the French. Every so often we meet quite admirable French characters. However, the plots are driven by conflicts between Richard Sharpe and absolutely loathsome villains: Pierre Ducos, Philippe Leroux, etc. on the French side, Obadiah Hakeswill, Sir Henry Simmerson, and others on the British. These villains tend to be put together as many vices as possible (cruelty, venality, greed, dishonesty) and Sharpe fights against their perfidy as much as against the French army. However, while this might seem like a less simplistic moral story world in that it there is no overarching good or bad side, in a way this is the most simplistic at all in that resorting to story conflicts between our main characters and such cartoonishly wicked villains means that moral choice isn't actually a major factor in driving the story. Sharpe doesn't have to choose what is good, he simply has to defeat these obviously very bad people.
Some other stories simply don't spend much time on moral choices. In a sense, I'm more hesitant here, in that by talking about something which I think isn't there, I may simply be talking about my having missed something, so I encourage people to chime in if they disagree with me. This doesn't necessarily mean that these are amoral stories, it just means that making moral choices does not play as a major driver of the plot and character development. Two examples that spring to mind of books which I enjoy a great deal that I think fall in this category are Alan Furst's espionage novels and Patrick O'Brian's nautical adventures. In Furst novels, I sometimes feel this leaves a bit of a hollow core to them. I love the historical research and mood of these novels -- set in the political and military underworld just as World War II is looming over Europe -- but they mostly involve a character being sucked into this underworld and fighting against encroaching fascism, there's actually very little sense of moral choice or moral consequence in the novels. Perhaps that's a function of their bleak tone. The O'Brian novels are certain not bleak. They're filled with humor and incident and adventure and colorful characters. O'Brian does not indulge in the sort of cheap conflict which arises from having his heroes fight absolutely wicked villains. Most of the antagonists that we actually meet are fairly honorable men, and Jack Aubrey sometimes feels quite low after having to fight an action in which brave and honorable enemies die -- though while the action is going on he's all exhilaration. But in part because Aubrey is a very instinctual character while Maturin is a secretive and decided one, the books simply don't focus much on moral choices as a driver of conflict.
So what novels are examples of moral realism? Brideshead Revisited, certainly one of my favorite novels, is one which I would class in this category. I think that's also what gives Rumer Godden's novels such as China Court and This House of Brede such appeal. Jane Austen's novels are also very much driven by characters thinking about, making, and dealing with the consequences of moral choices in a complex, everyday setting. I think there are also cases to be made for more fantastic stories having at least elements of moral realism. Lord of the Rings and Ender's Game are two that occur to me right off.
Applying moral realism to a type of situation which is too often written in one of the other modes that I've listed is also what drew me to The Great War as a project. I wanted to write about the conflicts of the early 20th century, starting with World War One, through a lens of everyday experience and the kind of moral conflicts and consequences that ordinary people faced when plunged into these cataclysmic situations.