For thousands of years, stories have been used to explain why things are the way they are. They are used to explain natural phenomena, parts of culture, and proper ways of behaving. Many types of stories are used, including myths, legends, folk and fairy tales, and fables, and although similar, these types of stories are not the same.
Myths are stories that are believed by the people of a culture to be true, and they are sacred. They often revolve around the activities of gods and goddesses, heroes or demigods (half human, half god), magical creatures, and magical objects.
Legends are stories based on real people or events, but over time the stories are embellished and sound grander than what actually happened. The main character in a legend is typically a human rather than a god.
Folktales and fairytales are fictional stories that have been passed down through oral tradition. Because they are passed down through word of mouth, different elements of folktales may change over time or across regions. Folktales may or may not contain magical elements, but fairytales always do.
Fables are stories that are used to teach a moral or lesson. In fables, non-human characters such as animals, plants, objects, or forces of nature are given human attributes or characteristics like emotions, speech, and human experiences. Often there is a surprise plot twist at the end and a saying to help us remember the lesson.
Fables, folktales, legends, and myths are found all over the world, and each serves an important purpose in explaining a culture's worldview.
Sources: Funk & Wagnall's New World Encyclopedia, World Book Kids, World Book Student