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The transforming of the world into a place devoid of all things even mildly unsavory to "family values." The world thus becomes as a magical fairyland, thus it resembles a pointless Disney story. It is important to note not only the contribution that the word "Disney" makes to "disneyfication," but also the contribution that the word "fiction" makes. The "-fication" root is, as you will notice, only one letter removed from "fiction," which provides extra emphasis on the unrealisticness of things that have been disneyficated.
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