"At the heart of every legend there is a grain of truth"
- Michael Scott
In Frank Herbert's Dune, the gifted hero of the tale used his military skills, natural leadership, and participated in the legends seeded by the order of manipulators to whom his mother belonged. He won and ousted the current Emperor of the Galaxy, marrying his daughter and ending all conflict...or so he thought. We later discover that the religiously inclined people he had helped achieve freedom decided to found a church upon his deeds, make him the living Messiah and launch a jihad throughout the galaxy in his name. In dispair, he walks out into the desert, apparently never to return.
Paul Atreides was fighting for revenge and recruited the Freman to his cause by listening to his mother's advice to play along with the legend. As it happens, he exceeds the expectation but that is anothe matter. What is important is that the truth is soon overshadowed by the Legend and, once those directly involved in real events are gone, nobody is left to say "that did not happen" so people are free to believe the more exciting version.
This is a manifestation of the phenomena we like to call "Storyteller Syndrome" or, in simple terms, storyteller's exaggerating or, more accurately outright lying in order to draw their audience in better.
Let's compare the following two versions as an example;
A large and violent man, while engaging in his normal activities of reaving and raiding, kidnaps a woman who was held prisoner by his latest 'clients'. I turns out that she is the princess or somewhere or other and had, in fact been kidnapped by a rival of the king's. The king is an old man and the princess his only heir so marrying her would grant her father's rival the kingdom. Our hero realised that she is going to be worth a great deal of money so does not do anything that could reduce the reward as he normally would under such circumstances. Of course, our villian learns of this and makes numerous attempts to recapture his bride and murder our hero but, being a man of action and quite well versed in the art of murder, our hero prevails every time. Arriving at the king's castle, our hero confronts the villain, who snuck in and tried to murder the king, but is stopped by the hero because that'd mean he could kiss his money goodbye. The king, though grateful, is quite old and rather crazy. The kindgom is also rather poor so he marries his daughter off to our hero and has the villain executed; killing two birds with one stone. Having heard that the king's advisors are planning to do away with him after the wedding, our hero murders the king, seizes the throne and traumatises the princess. He goes on to lead a brutal campaign against the holdings of the rival. The princess dies less than a year later of a broken heart during childbirth.
Son of the Gods of the mountains, a noble barbarian exile is sent by his father, the God Muklebuckle to save the princess from a terrible wizard who infiltrated the kingdom and enchanted Lord Flafflefarst of Overhereia. The noble hero defeats a band of evil monsters guarding the princess and rescues her, carrying her off into the forest for her safety. The wizard hears of this and sends beasts, monsters, and demons after the hero but he defeats them all, with a little bit of help from the gods, of course. During the journey, the princess falls in love with the hero's noble spirit and rather rugged good looks. Upon arriving at the castle, the hero engages in terrible battle with the wizard who is actually O'Deer'Jhez'Uz the dragon demon whom he barely defeats and almost dies, but love saves him at the last minute as the princess swears to marry him if he lives. Her father, unfortunately, perishes in the melee. Our hero marries the princess and, in honour of his departed father, leads the army to cleanse the land of Overheria and Rhihttheretu of demons and magicians. Lots of people die but the end of the world is avoided and the gods are happy...probably...
Of course, history does either tend to be written by the victors or to flatter them and ensure the writer retains the ability to continue writing...and breathing, of course.
History and Myth
We are pretty much certain these days that a great many of the old stories are not accurate representations of events. We are less credulous as a society than people once were, blame it on knowledge. Back when many of the older stories were written, great swathes of the world were unexplored, unknown, and undocumented. Monsters could live there because nobody could say for sure that they did not.
People had few other forms of entertainment so liked to tell and be told stories on dark winter nights. Their lives were also quite short and brutal in earlier times; ordinary people had rather unfulfilling lives or constant work and few prospects. Hearing tales of a common man going on adventures and eventually becoming king was bound to go down well, give them something to dream about.
That's the purpose of stories, really, isn't it? To give people something to believe in outside of the humdrum of normal existence. That the good people will triumph over the evil, that common people can do uncommon things, that there is a sense of justice to the world. Each era has it's fashions in stories; in medieval times, the common man getting one over on the aristocracy or the church was popular. In today's time, the unregarded individual, who is often persecuted for being different is found to be different because of a previously undiscovered heritage which makes them uniquely suited to save the world and gain romantic affirmation.
Stories are a way of escaping our everyday lives; they always have been and they always will be; they are about finding sense and meaning in a world where such things are in short supply. We like to believe that these things can happen because if they can't, then what's the point?
The Persistence of Belief
Heroes of the Ancient Greek, Roman and similar eras were the action movie stars of their day. The gods were both the stars and vilains, depending on who the hero was. It was like a great series where you never know what's going to happen next, who'll form an alliance with whom, who'd get jealous of which other god, who'd father or mother a demi-god to commit heroic or villainous acts next. It was like that rather popular fictional series involving dragons everyone liked.
The grand an heroic heroes of the scrolls were the embodiments of justice, fairness, and nobility that everyone could aspire to and admire. The villains were everything the people disliked at the time or those on charge disapproved of. Often subtle stabs at those in power found their way into them. They had to be subtle in those days because the reaction from an those in charge rarely would be. Critics? Oh dear, I'd rather get figuratively stabbed in the heart than actually...
These days we look for more depth because ideals and paragons are no longer our thing. We still like the justice and reason behind everything parts. Our world, in spite of the vast increase in knowledge and education, still hasn't found where Truth and Justice live. Governments are still filled with egotistical liars, the poor still suffer more than they should, life is much unfairer than it needs to be, the status quo see-saw tends to be much heavier at one end than it is on the other.
It is no coincidence that the majority of villains we see suffering a variety of dramatic deaths in movies are mega-rich people of highly questionable morals and an enjoyment for taking over the world by killing all the poor folks. The hero is usually a working - middleclass nobody who gets an unexpected chance to restore the balance and take out the rich guy that makes their life unfair and miserable.
Yet, as much as our fiction appears to be making the rich pay for their crimes and suchlike, we desperately want to join them also. Billionaires coming down from their high eeries to notice a much-ignored nobody and make them rich too is quite a common theme also. It seems like quite a lot of people are not happy with their position is society and are seeking all kinds of ways to get out.
Conclusion
The truth is not as important as the dream. Nobody feeling in need of a cheering up picks up a history book or looks for a documentary on famous dynasties, well some people might but fewer in number than those that won't.
We all like to believe that the world can be fair, that a reward awaits those who live well and are good, that there are heroes out there somewhere, opposing the evil we see in everything. We like to think that people will get what they deserve, especially if it isn't good. We like to believe that fairytale love exisits and will come to sweep us off of our feet. We like to believe we could be attractive, powerful, in control, and decisive.
We read about it because we can escape for a while from reality and dip our toes into the fantastical and truly believe that if it can happen to them, then maybe it can happen to us one day too.