"Happy Endings" is a short story about short stories, or about the writing process more generally. It is therefore considered a piece of metafiction, or fiction written about other fiction. Metafictional works deliberately draw attention to the fact that they are being curated by an author or artist; they ask the reader to recognize the artificiality or constructed nature of the work rather than attempting to immerse readers in a believable but unreal world.
In many ways, metafiction shares a dramatic counterpart with the concept of the "fourth wall." In drama, the "fourth wall" refers to an imaginary wall (alongside the typical three walls of a theater) that exists between the actors on stage and the audience. By maintaining the fourth wall, actors maintain the fiction of the drama, presenting it as a phenomenon entirely separate from the presence of the audience. When a play "breaks the fourth wall," it draws attention to the audience, thereby drawing attention to the fact that what is occurring on stage is being performed rather than actually happening.
Atwood makes use of this now conventional theatrical tool in her own story, breaking the fourth wall of fiction by frequently referring directly to the reader and by structuring her story in such a way that it is impossible to interpret as a single narrative. In so doing, "Happy Endings" becomes a commentary on the nature of writing, reading, and storytelling more generally, encouraging readers to think about what elements of fiction are most important, most meaningful, and most likely to intrigue an audience.