1. Did not know that. Thank you for telling me
2. What is wrong with my sentence? Should I have written something else? I am not a native speaker/writer of English, so I kind of cannot see what is wrong with it except for "The father of fantasy literature[...]".
When you said that it is based "on what he knew" of Norse mythology, it gives the impression that he knew something about it, but not all that much. If you take the literal meaning of what you wrote you didn't say anything wrong, it's just that it gives the impression I mentioned previously according to how that expression is used normally.
In any case, I don't think there is anything wrong with saying Tolkien is "The father of fantasy literature", since most (or pretty much all) modern fantasy literature is to some degree based on his work, even if there were fantasy works before his. If you want to be absolutely correct I would suggest just changing to "One of the fathers of fantasy literature" instead of changing the sentence as much as you did in the latter version you posted.
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