I know this is going to make me seem clueless, but what the heck is literary fiction? Or Commercial fiction? Admittedly a dork.
Literary fiction is generally more serious in tone and message. It makes you think. The content is more about thought and feeling than plot and action (although there is plot and action in it). It is character driven and deals with emotions and experiences that are universal to the human condition. The writing style is also elegant, picturesque, descriptive.
Examples of literary fiction are: To Kill a Mockingbird, The Poisonwood Bible, and a lot of the titles you read in high school English classes. Or books that win The Pulitzer Prize for fiction and other literary awards.
Commercial fiction (also called mainstream or genre fiction) is generally more plot driven, faster paced, often deals with current social problems. Look at any fiction best-seller list to find examples of commercial fiction.
Nathan Bransford talks about it HERE.
Great article HERE.