Harry Nicolaides is an Australian author living in Thailand. In 2005, he published a novel, Verisimilitude, which included a short scene discussing the personal life of a fictional Thai prince and suggested some sort of abuse of royal power. For this, he was detained when leaving the country, and has just been sentenced to three years imprisonment for "slander[ing] the king, the crown prince and Thailand and the monarchy".
So, not only can the Thai government not distinguish between fiction and reality - they're also unable to recognise that this actual abuse of power does far more damage to the reputation of their sacred monarch than anything written in a bad novel. But pointing that out is probably the sort of thing which gets you arrested.