Italian in navy reread fine novel (6,4)
I believe the answer is:
'novel' is the definition.
(novel by William Makepeace Thackeray)
'italian in navy reread fine' is the wordplay.
'italian' becomes 'it' (abbreviation for Italian).
'in' indicates putting letters inside.
'reread' indicates an anagram (read in a new way).
'fine' becomes 'fair' (I've seen this in other clues).
'navy' anagrammed gives 'vany'.
'it' put inside 'vany' is 'vanity'.
(Other definitions for vanity fair that I've seen before include "Book by Thackeray" , "market pilgrim progressed through" , "Sharp tale" , "place visited by Christian" , "Novel by Thackeray" .)