This is a continuum onto which any film can fall.
Start discussion by asking students to define "realism" and how that shows up in film. Ss will offer up documentaries, war films, etc. Ask "What is the most realistic media?" News? Documentary? Nope. Security camera footage, live and unedited. Boring. But, as soon as someone selects part of that to show on the news (a store robbery, for example), an editor gets involved. And bias. And subjectivity. It loses just a touch of its realism.
Proceed to move down the continuum, discussing examples. How is news realism? How is it not? What about documentaries? Discuss how reality TV uses much editing to craft the narrative, how "March of the Penguins" is only a documentary in the sense that the main actors are unpaid, etc. Move on to historical films ("Bridge Over the River Kwai" "Matewan"), biopics (Walk the Line, Ray, JobsI), then films with a historical setting ("Titanic" "Pearl Harbor" and "Cold Mountain" come to mind).
Move on down to more Formalistic films such as "Pan's Labyrinth," animated films, Sci-Fi, etc. The only truly formalistic films which students regularly encounter are music videos or Disney's "Fantasia." Formalistic films are more interested in form than narrative. Most experimental or avant garde films are formalistic, and may include such techniques as manipulating the actual film (with acid, paint, sandpaper, etc) or simply displaying colors.
Almost every film the students have ever seen falls into the umbrella category of "Classicism" which means that is follows a traditional plot paradigm, even if the editing is elliptical -- even "Memento" and "Pulp Fiction" fall under classicism, though their editing is far from traditional. Movie theaters rarely show films that are truly formalistic or too realistic (live broadcasts, sports events, or news, etc.)
HW: Students draw a line and place 5 films (NOT any discussed in class) on the continuum. Then, below that, they defend each film's placement at that location. For example: "Minority Report is a bit more realistic than Star Wars because the setting is in the near future in America, while Star Wars is A Long Time Ago In a Galaxy Far Far Away. Many things in modern life can be seen in MR, whereas Star Wars seems to relish in showing us the new, unusual, and unexpected."