Contemporary Realistic Children's Picture Books is a very popular genre. Though the stories are rooted in reality (could actually happen), the characters are fictionalized.
These picture books focus on a myriad of problems facing children today. The issues can be anything from friendship, siblings, living with two mommies or daddies, bullying and multiculturalism to belief in self, belief in angels, fear of the dark, loneliness, death, physical or emotional disabilities and peace.
Although the range and potential for storytelling are huge, the "real" situation is the jumping off point. It's the imaginative storyline and believable characters (human or otherwise!) who drive the story.
As with all picture books, image is the key, and I'm not talking about the illustrations. If you're not an illustrator don't think about the pictures.
Images are your doorway to the writer's imagination. Words and stories flow more easily when primed by images rising up from the imagination.
Picture Books are short. The going word count is less than one-thousand words and can be a lot less.
Take time to explore children's books in your library and bookstore. Exploring online isn't the same as holding the book and being drawn into the words and illustrations!
Take risks. Have fun! No matter how serious the issue is in the book, trust the imaginative children's book writer in you!
In the world of children's books, the imagination can take you anywhere!